Photos outside the Wynn casino resort with a view of the Grand Lisboa casino resort building in Macau.

Anthony Wallace/AFP/Getty Images

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Shares of Wynn ResortsLas Vegas Sands and other gambling companies that operate in Macau dropped sharply Tuesday after the government there said it would tighten its control over the casino industry. 

Wynn Resorts (ticker: WYNN) stock finished the regular session down 10.9%. Las Vegas Sands (LVS) was off 9.6%.

Macau’s Secretary for Economy and Finance Lei Wai Nong mentioned Tuesday during a media briefing the “healthy and sustainable development” of the gambling industry through regulatory improvements.

Macau’s second five-year development plan, issued Monday, also laid out plans to increase local ownership in gaming companies, according to a report.

The Chinese city is the world’s biggest gambling market by revenue. The pandemic has taken a bite of casino revenue. Gambling revenue in Macau fell last month to $554 million, its lowest monthly total this year, according to The Wall Street Journal. In 2019, before the pandemic, the city averaged $3 billion in monthly casino revenue.

Wynn and Las Vegas Sands are both based in Las Vegas, but their prospects are closely tied to Macau. What’s more, their concessions to operate in China are up for renewal in 2022, adding another element of uncertainty.

Las Vegas Sands said in March that it planned to sell its Las Vegas Strip real estate, including iconic the iconic Venetian Resort, for $6.25 billion to

Vici Properties

(VICI). Las Vegas Sands has talked about adding a casino property somewhere in the U.S., possibly Texas.

“We feel very strongly about the long-term success and future of Macau,” Chief Operating Officer Patrick Dumont told analysts in April during the company’s first-quarter earnings call.

In 2019, before the pandemic hit, Macau accounted for about $8.8 billion of the company’s $13.7 billion of net revenues, or roughly two-thirds.

Wynn Resorts has a presence on the Las Vegas strip with its high-end properties. However, in 2019 nearly $1.4 billion of its adjusted property earnings before interest, taxes, depreciation and amortization, or Ebitda, came from Macau, or roughly 75% of the company’s total.

During a conference call with analysts early last month following the release of second-quarter earnings, CEO Matthew Maddox said in part that “we have a very good relationship in Macau with the local government.”

Investors will be paying close attention to that relationship.

Meanwhile, MGM Resorts International (MGM), a big player on the Strip and with a host of regional U.S. casino properties as well, is much less dependent on Macau, though it does have operations there. Its shares were at $41 and change Tuesday afternoon, down about 4% on the day—a better result relative to Las Vegas Sands and Wynn Resorts.

Wynn was at $91.77, down more than 11% on the day’s trading; Las Vegas Sands was at $38.54, off more than 10%.

Write to Lawrence C. Strauss at [email protected]

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