China has been looking to make gambling legal in its mainland. Macau, over the years, has been considered as Asia’s Las Vegas. In fact, it has generated five times more than what Las Vegas gambling industry has earned annually.
According to people who are familiar with the talks, China has been looking to draft a proposal that will in effect make gambling legal on Hainan Island. This would be an unprecedented move considering how it can affect the economy of the province.
The change would allow online gaming, sports betting, and lottery in Hainan. Though the discussions weren’t made public yet, the proposal was said to bring to fruition opening of physical casinos over the long term. So far, China has banned casinos in the mainland.
In order to make it possible for more tourists to go to Hainan, China is also planning to relax visa rules and even looking to build a new airport in Hainan. And why is China actually doing this to Hainan? What made them decided that it is time to open up Hainan to the gambling industry?
Hainan’s Financial Problems
The province has been said to be experiencing fiscal deficit. It also contends with the debt woes of HNA Group Co., which is the largest conglomerate that faces pressure from its creditors. So what can be its effect on Macau?
Now, this can be a problem for Macau in the long run. For instance. Macau casino stocks dropped when this news broke out. Sands China and MGM China Holdings both dropped by as much as 6%. On the other hand, you have Wynn Macau that fell by as much as 6.7%. For Hong Kong-based strategist with South China Financial Holdings, Sam Chi Yung, it is still difficult to say what the impact would be on Macau. However, it is certain that Macau’s revenue on gambling will definitely drop.
Hainan is just about the size of Switzerland. It has been referred to over the years as China’s Hawaii mainly because of its beautiful beaches. It has also served as a jumping point for the Chinese naval and air force in patrolling areas in the South China Sea.
Though there is no certainty yet to how much time is needed before everything is going to be completed, there is already a sign that the start of the project is going to happen soon. Provincial officials are already preparing for the arrival of President Xi Jinping. This would mark the 40th year that China embraced foreign investment under Deng Xiaoping.
What Makes the Project Interesting?
China’s plan to build a gambling center in Hainan could potentially shift how China approaches the gambling industry. For instance, this could threaten the $33 billion casino industry in Macau. It has been considered as the largest gaming hub in the world. And because Macau attracts local Chinese tourists, it is possible that both Hainan and Macau are going to fight towards the same market. Is this a good idea or a bad idea for China to open Hainan towards the gambling industry?
