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Hainan liberalization no threat to Macau for now

China’s plans to allow the development of horse racing and to expand sports betting on the southern island of Hainan will not include casinos and therefore will not pose a threat to Macau for the foreseeable future, Bernstein Research wrote in a note.

Beijing has announced it will establish a free trade zone to boost tourism and economic development. As part of the plan, it will explore the development of sports lottery and instant lottery on large-scale international games in the region, but it has not given much detail.

“What is clear is that there is no reference to anything remotely resembling casino gambling being allowed in Hainan,” the note said. “While any casino legalization on Hainan would create problems for Macau, we do not see casino development in China as a realistic threat to Macau now or in the foreseeable future.”

However, the firm points out that there may be downside from plans to promote Hainan as a tourist destination, as it may shift focus from the development of Hengqin.

The area bordering Macau has been designated as a tourism and entertainment zone and its development was expected to provide additional hotel capacity and help to develop the mass market sector by providing the space for further amenities. Hengqin is easily accessible from Macau.

“Hainan's tourism development, coupled with infrastructure improvement and duty free shopping, may shift the focus away from developing Hengqin to the same level as had been originally contemplated,” Bernstein said, though added it is too early to tell what impact there will be.

On Sunday, Secretary for Economy and Finance, Mr Leong Vai Tac said the government is closely monitoring "the possible impact on Macao of public policy introduced in various regions."

"Macau has been dedicating further effort to advancing its overall attractiveness as a tourism destination and enhancing its non-gaming offerings at local resorts, in order to foster its overall competitiveness and address worldwide competition," he added.

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