Gaming ETF Hits Rough Patch as Sands China Looks at Junket Operators

ETF Trends

The gaming exchange traded fund rolled a snake eyes Friday as Las Vegas Sands Corp (LVS) reforms the way it does business in Macau to meet compliance rules.

The Market Vectors Gaming ETF (BJK) was down 0.7% Friday. BJK declined 3.8% over the past month and is down 1.8% year-to-date.

Las Vegas Sands’ Chinese unit is putting Macau junket operators, those who bring wealthy gamblers from mainland China, under the microscope as the company tries to screen against money laundering and other wrongdoing, Bloomberg reports.

Junket operators, who account for two-thirds of betting in Macau, lend to Chinese players who are limited on how much money they can bring over from the mainland, and the operators collect gambling debt. [Gambling ETF Cools Off]

The changes could diminish the number of junket operators working with Sands and potentially push away high rollers

“It is political, it is also financial,” I. Nelson Rose, a professor at Whittier Law School, said in the article.

Shares of Sands China declined 1.1% Friday, the largest fall in a week, while the Parent Las Vegas Sands plunged 3.2%.

Revenue growth from VIPs slowed in the first quarter to 12.5% from 18.3% in the fourth quarter, and Wells Fargo believes the VIP segment will continue to slow, reports Shuli Ren for Barron’s.

“We follow a proprietary survey of 600 high-income Chinese, tracking sentiment towards the economic outlook. It has typically led Macau stocks and gaming revs,” Wells Fargo analyst said in the article. “Sentiment in March dropped following months of stability and is now well-below November highs.” [Looking for a Recovery in Growth ETFs]

The Market Vectors Gaming ETF has a 8.3% weight in Las Vegas Sands Corp and 7.9% in Sands China.

Market Vectors Gaming ETF

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Max Chen contributed to this article.

 

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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