Goldman Sachs noted China's recent strengthening position on illegal online gambling sites and tightening regulation of intermediary activities, and based on increased censorship, the bank believes casino operators may be more inclined to cut their intermediary lounge exposure and focus further on the high End midfielder business.

The bank refers to the contribution of the lounge business to gambling from 66% in 2013 to 39% before the pandemic, with an estimated 70% of intermediaries, with Suncity (01383.HK) contributing about half, or 35% of the total VIP room gambling. In FY2022 and 2023, the current forecast for the lounge business will return to 15% and 25% (previously 45% and 55% respectively) in 2019 levels, with total gambling reinstated to 51 and 72% respectively in 2019 levels. The bank's EBITDA forecast for six casino operators fell by 2% to 20% in FY2022 and 2023, with a target price drop of 3% to 13%. (See table)

In addition, the bank believes that with recent news about intermediaries, coupled with the COVID-19 variant, Omicron, is expected to increase volatility in the near term.