3 Casino Stocks to Avoid as Macau Announces Increased Government Supervision By StockNews

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Stock Markets1 hour ago (Sep 20, 2021 03:30PM ET)

Although the reopening of brick-and-mortar casinos and the increasing popularity of online platforms have helped the casino industry to a decent recovery this year, shares of several casino stocks plunged in price with Macau’s recent announcement of strict new restrictions on operators in the world’s largest gambling hub. Consequently, we think investors are better off avoiding fundamentally weak casino stocks Las Vegas Sands (NYSE:), MGM Resorts (NYSE:), and Wynn Resorts (NASDAQ:). Let’s discuss.The casino industry has experienced a decent recovery this year with the reopening of brick-and-mortar casinos and the growing popularity of online gambling. However, shares of Macau casino operators declined by approximately one-third of their values, losing about $18 billion, on September 15, as Macau declared stronger supervision of casino companies in the world’s largest gambling hub. Macau's secretary for economy and finance, Lei Wai Nong, gave notice of a 45-day consultation period, pointing to shortcomings in the industry’s supervision.

The new regulations are designed primarily to restrict illegal cash transfers and unregulated lending. However, the shares of U.S. operators suffered the worst selloffs on investor anxiety over the uncertainty surrounding the future of casinos in Macau.

Given this backdrop, we think it could be wise to steer clear of casino stocks Las Vegas Sands Corp. (LVS), MGM Resorts International (MGM), and Wynn Resorts, Limited (WYNN), which possess weak growth prospects and bleak financials.