The southern province of China, Hainan, is preparing for a wave that could take on the Macau region. The Chinese government is hard at work preparing a draft of legislation that could be the route that allows for gambling to be legal within Hainan. Bloomberg recently shared that the government is thinking of having online gambling, sports betting, the lottery and allowing actual casinos to be constructed. What is the motive behind these decisions, well tourism seems to be the main driving force here, it is hoped that through the introduction of gambling tourism will significantly increase within the region.
Why the News Shocked the World
Gambling in China is illegal within the inland provinces, not even lottery tickets may be purchased or sold to the public unless the government has approved of the transaction. A few years ago in 2014, the Chinese President Xi Jingping led a formal attack on forces of corruption within the country and caused a massive loss to the major players within the Asian gambling industry that ran for a total of two years. They then caused even more stress subsequently by decreeing that any form of investment within the Chinese gambling industry is illegal.
Hence, as you can strongly imagine, just about every financial analyst tracking the Chinese economy fell over when they heard that Hainan was being handpicked as a gambling hub. Stocks in all of the major Chinese gambling casinos in the country fell after the news broke. MGM China Holdings Ltd fell by about 6% and Wynn Macau Ltd. stocks fell by a huge 6.7% since the news hit.
Strategists from South China Financial Holdings Ltd. have stated that even though they are currently unsure what the overall impact of the proposed casinos in Hainan will ultimately be on the revenue for the casinos in Macau, there is one fact that they are currently sure of. The one thing that all analysts can agree upon is that the amount of people who will travel to Macau specifically to gamble will significantly drop.
Other sources have claimed that the main reason the Chinese government has allowed the proposal for gambling in these provinces over others, is that the introduction of gambling seems to be a credible way of alleviating some of the financial woes of this province. The Chinese government further hopes to boost this project by increasing the improvement of infrastructure with brand new railways, highways, airports and of course many more buildings, hotels, and other infrastructure projects to prepare Hainan for the influx of tourists.