Casino stocks traded on the Hong Kong exchange have been on a roller coaster in the last couple of weeks.

They had been trending down since the pandemic in China cut into their revenue. However, lately they seemed to be recovering. One analyst speculated that the stocks had hit rock bottom. He thought the bad news from China was already built into the price. It appeared he was right — for a day or two. Then, on January 18, the government released a draft of the new gaming regulatory law, which contained more bad news for the casinos. In a panic, the stocks started back down. Then, when it looked like they might disappear from the index in disgrace, additional details revealed some good news for casinos. Significantly, no regulator will be sitting with casino management, watching closely every decision. Equally important to the operators, they don’t have to ask for permission to issue a dividend.

On the other side of the ledger, casinos will have to be more active in “responsible gambling” and they will have to support local small and medium businesses. It also appears that the investment in non-gaming amenities will be codified. Defining and specifying the details of those elements may be helpful. The casinos have been trying for years to please the governments of China and Macau, but did not know exactly what was expected. Official guidance and specification would make planning to please easier.

The impact of other areas in the proposed bill is less certain. The new licenses will be good for 10 years, not the best time frame for major long-term investments. The number of concessions will remain the same. However, the “satellite” license will go away; the satellites have a couple of years to sell themselves to a concessionaire. The government is in essence changing the business model from high-rolling gambling to middle-class tourism.

The operators will need government permission to operate in other jurisdictions. That rule will give China control over other jurisdictions targeting Chinese gamblers. It will not stop casinos in Cambodia, Vietnam, and the Philippines, but it does mean that the Sands, Wynn, Melco, and MGM will not be investing in those countries.

Another element of the bill is truly confusing. The bill is meant to support Chinese policies and protect national security. In fact, the government reserves the right to terminate the concessionaire’s contract for reasons including threats to national security and public interest and breaching its contractual obligations.

There are more details to come. The bill has passed its first reading and is now in committee for fine-tuning. It will then return to the Legislative Assembly of the Macau Special Administrative Region (AL) for a second reading.

There are many opinions about the final bill and the next stage, the proposals. Even when the final version becomes law, many details will still need to be provided. Watching the process is a bit like observing Putin in the Ukraine. There are things you can see: troops on the border, blood supplies being rushed to the area, and military exercises in the Irish Sea. But you cannot see into Vladimir’s mind. Like the situation in Macau, everyone has an opinion, but only those in the inner circle know the real intent of the policy. President Xi Jinping and his subordinates are no easier to read than President Vladimir Putin.

The gaming operators are doing everything they can to appear to be good citizens. Each has given a year-end bonus to its employees. The bonus is equivalent to a month’s pay; thus, gaming employees get 13 or 14 months’ pay a year. The bonuses originally were meant to hold employees in a very competitive environment. The casinos were raking in the dough, but conditions have changed. There is no dough raking and no competition for employees. Now the policy is meant to show support for the workers and Chinese labor policies.

The corporations are also careful not to criticize the government, the process, or China. A few years ago, Steve Wynn was very vocal in his criticism of the government’s policies and regulation. It lasted all of one quarter. The following quarter on his earnings call, Wynn walked back his comments and praised China and Macau. He said it was such a good place to do business that he was going to move to Macau. Clearly, someone warned him of the dangers of angering Beijing.

The Sands is more careful. On its most recent conference call, Sands China said, “We continue to be very bullish on the Macau market despite the past 20 months and we like what we see with the re-tendering process.” The Sands has a dilemma. Before the current crisis and the changing regulation in Macau became obvious, LVS sold its Nevada operations, promising to concentrate in Asia. However, Japan is no longer an option. Singapore and Macau are experiencing severe declines in revenue from the pandemic. And, of course, China is doing everything it can to eliminate the VIP segment of the Chinese market. The changes in China and Asia make the “all-in-Asia” strategy less viable.

Wynn Resorts is in a better position; it still has casinos in Las Vegas and Massachusetts. It has none in the rest of Asia, nor, after Japan, any plans in region. Wynn appeared to be going full bore into sports betting, but it made a sudden about face and is offering to sell its sports division. However, Wynn just pulled off the biggest coup d’état since the Sands got a license in Macau. The company is going to build a casino-resort in the United Arab Emirates. It will be the only major casino in the Muslim Middle East. At first blush, it should be worth more than the rest of the corporation together, much like Sands Macau was when it opened. Granted, there are not 1.3 billion Arabs, but there are quite a few, some very rich Arab gamblers among them.

Melco has also expanded outside of Macau and is constantly on the lookout for additional opportunities to diversify. MGM was less reliant on Macau than the others and it is pursuing sports betting and online gaming in a big way. It is probably the most diversified operator in Macau.

Ten years ago, Macau was the very best place in the world to own a casino. In 2025, it is not even certain it will be a good place to operate one. The devil is in the detail and the detail is hidden behind a screen of metaphors and implied public policy. The true intent of President Xi’s policies is always a mystery.