China Prohibits Overseas Investments In The Gambling Industry

(Photo: QZ.com)

The status of several casino developments around the world are under a cloud this week after China tightened its rules on outbound foreign investment, with the gambling, property, hotels and entertainment industries all targeted by Xi Jinping’s government.

“Profound changes are taking place in international and domestic situations, and Chinese enterprises face not just relatively good opportunities but also various risks and challenges in overseas investments,” the State Council’s statement read, as the nation’s economic policy urges investors to focus on energy and heavy industry rather than “irrational” investments in things such as the gambling and sex industries.

There are currently big casino projects in London, South Korea, Australia and the Bahamas and investors will be looking for some clarity in the latest guidelines to come out of Beijing, who have been on a crackdown of almost all gambling-related activities since Xi Jinping came to power.

Macau suffered heavily in 2014 and 2015 on the back of his policies, with Casino.org stating: ‘Among those targeted were VIP junket companies catering to the mainland’s ultra-wealthy elite. On the pretext of concerns that money was being swept out from under China’s control through Macau, law enforcement agencies severely hampered the touring operations, and the result was vacant high-roller tables.’

The most recent statement seems to be an affirmation of the policies which have already seen Chinese outward investment drop by over 40% according to Dealogic, and there is talk of the Chinese government being concerned that some of the biggest foreign investments may fail, as well as worries over the outflow of money.

Friday’s statement said:

“Some companies focused on property rather than the real economy, which, instead of boosting the domestic economy, triggered capital outflows and shook financial security.”

Whether there will be any real impact on ongoing developments is unclear, but the continued change of direction by Beijing seems certain to affect future investments.