Macau’s decision to curb aspects of its casino industry, as reported by WSJ colleague Jonathan Cheng, underscores why betting on casino stocks with significant Asian exposure carries particular risks associated with regional politics. As aggressive as the likes of Macau and Singapore are in building up lucrative casino industries, both locales are run by highly restrictive governments whose interests will always take priority over those who own shares in such firms as Wynn and Las Vegas Sands. Beijing’s top concern is maintaining social cohesion as best it can despite a still-very–wide chasm between the haves and have-nots. Singapore’s leaders – while less authoritarian than China’s – nonetheless know their future stems from maintaining the city-state as a pristine safe-haven; introducing casino culture as Singapore is in the process of doing – with great investment and fanfare – is risky, to say the least. Asians will unquestionably keep coming to Macau and will gravitate to the new Singapore venues even as the governments tweak rules, regulations and general access in coming years if not months. Both locales are most assuredly banking on a flood of casino-related travel and tourism revenues. But political stability will inevitably trump all other interests and the China and Singapore bosses will do what’s required to make sure the status quo isn’t threatened by the sort of frayed social fabric which widespread gambling tends to create. investors buying up stocks on the assumption these resorts will be unbridled eastern Las Vegases should think twice.
