Casino stocks and related gaming exchange traded fund are stuck in a losing streak as UnionPay, China’s largest credit card company, cracks down on illegal transactions in Macau.
The Market Vectors Gaming ETF (NYSEArca: BJK) declined 2.5% Thursday, falling below its 200-day moving average. BJK has decreased 7.2% year-to-date.
After meeting Macau authorities, UnionPay introduced new “risk management and anti-money laundering measures,” reports Demetri Sevastopulo for Financial Times.
“It is our top priority to combat overseas money laundering, capital flight and other illegal bank card use, and we collaborate closely with relevant authorities to do so,” UnionPay said.
The new reforms are an attempt to rein in transactions that circumvented Chinese exchange controls to gamble in Macau casinos.
“The growth in payment cards is huge, because of China’s corruption crackdown. Mainland gamblers in Macau don’t want to reveal how much they gamble, so they use cards,” an industry analyst told South China Morning Post.
Macau, a special administrative region of China, has grown into a gambling mecca in Southeast Asia as gambling is illegal on the mainland. The area is notoriously known for facilitating money laundering schemes from China.