Shares of Macau Legend, which owns and operates a casino resort in Macau, fell more than 20% to an all-time low on Monday after its chief executive was arrested in the world’s largest gambling hub.
The company said CEO Chan Weng Lin resigned on Monday after his arrest, which came as authorities stepped up a crackdown on illicit capital outflows from the Chinese mainland, where all forms of gambling are illegal, and after the high profile arrest of Suncity boss Alvin Chau in November.
Macau Legend said in a statement to the Hong Kong stock exchange that Chan resigned “to avoid distraction” to the company and for the interest of shareholders. It said it did not expect any adverse impact on its daily operations.
Police in the former Portuguese colony said in a statement on Monday that they had arrested two other people on charges of illegal gambling.
All up, they have arrested 15 people, including Chan and Chau, since November, on illegal gambling and money laundering charges. Six have been detained, they said.
Chan owns about a third of Macau Legend, which runs three casinos under a service agreement with SJM Holdings and owns the Fishermans Wharf, an entertainment complex near the Macau ferry terminal. He is also chairman of Tak Chun Group, Macau’s second-biggest operators of junkets – cross-border trips to Macau’s casinos for high-spending gamblers – after Suncity.
Tak Chun did not immediately respond to a request for comment and Chan was unable to be contacted.
Apart from Chan, police have also arrested one other man for alleged illegal gambling and money laundering.
Zero Tolerance for Gambling
Analysts say the arrests herald a new era of zero tolerance of the promotion of gambling in China, in which the government supports development of the “mass market” segment, not high rollers.
Junket operators have traditionally offered easy credit to mainland Chinese high rollers, who play in Beijing-ruled Macau’s casinos and collect on their debts using underground financing channels.
“We believe the investor base has become well aware that VIP is no longer the segment that matters,” George Choi, an analyst at Citibank in Hong Kong said in a note on Monday.
“The Macau government’s recent clarifications on amendments to the gaming law signal that the government remains supportive of sustainable development of the mass segment.”
Now nearly non-existent, the opaque VIP industry made up more than two-thirds of Macau’s gambling revenue until just a few years ago.
Police said the latest arrests were linked to the Suncity case in November as the two groups – Suncity and Tak Chun – worked together, engaging in “illicit and criminal activities”.
Suncity and Tak Chun have been the top two junket firms in Macau, employing thousands, but data from Macau’s gambling regulator shows the number of licensed junkets has shrunk 46% over the past 12 months.
Shares in Macau Legend closed down 19% to a record low and fell as much as 29.8% to HK$0.40 during trading.
- Reuters with additional editing by Sean OMeara
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