Let the Games Begin in the US-China Trade War, Or End Online Gaming in MacauPublished July 21, 2018 by Lee R
Macau is a Mecca for gamers in China, but the new trade war may push things online if not out altogether.
A lot of American casinos have holdings in Macau, and they could be in trouble with the launching of the US-China economic trade war.
Report Warns US Holdings in Macau
US casinos in Macau may very well experience disruptions in their ability to renew Macau concessions, according to a report from political and corporate risk consultancy Steve Vickers & Associates (SVA).
The research group characterises Macau’s gaming sectors as “highly exposed” to fallout from China and the US hiking tariffs on as wide a variety of products as they can muster.
All six of the concessions of each respective Macau casino operator are due to take place between the years 2020 and 2022.
Three of those operators list a ruling majority to US companies: Las Vegas Sands, MGM Resorts and Wynn Resorts, companies whom the SVA report claims are not sitting “on a geopolitical fault line” holding their Macau concessions in the balance.
The group that stands to benefit from such slowdowns would be the local junket operators, who make their living for all intents and purposes on effectively working around the standard capital controls imposed by the Chinese government.
Most at Risk
Of the companies at risk of losing concessions, the report picks out Sands as having the roughest path forward in the event of a prolonged trade war. This is because company founder Sheldon Adelson is a major US Republican party contributor who contributed heavily to the winning Presidential campaign of Donald Trump, who is of course leading the charge against China at the moment. This could make Adelson’s interests a target of Chinese trade restrictions.
Potential for Escalation
Vickers calls that option a last result, but acknowledges that Trump’s unpredictability and public bullheadedness leaves the door open for escalation of any situation.
If casino operations are impeded in any way on Macau, that could make an ever greater question for online gaming: would “hardball” include the Chinese government revoking online licenses of US-based operators or US-based applicants in kind?
While no one likes to think of these things, a true trade war that uses embargoes as its main weapon could very likely carry over into the online gaming sphere, especially if the land-based sphere is used as a tool of combat. Add to that the fact that President Trump has had a controlling interest in casinos in the past, and the gambling industry could be a great place for China to take aim at the US jugular in an extended trade war.