In midday trading, Las Vegas Sands (NYSE:LVS) — operator of five Macau integrated resorts — and Wynn Resorts (NASDAQ:WYNN) are both off more than four percent. City of Dreams operator Melco Resorts & Entertainment (NASDAQ:MLCO) is lower by six percent following a downbeat second-quarter earnings report that’s being amplified against the backdrop of the regulatory crackdown.

This year, the Chinese Communist Party (CCP) ratcheted up scrutiny of consumer-facing internet and technology companies, creating pressure on the related stocks.

Last week, the CCP said it’s banning for-profit private tutoring services — many of which are publicly traded — stoking fears of a wider regulatory crackdown that’s seeping into Macau.

Macau Stocks Not Immune to Panic Selling

Already lagging due to the pace of recovery in the world’s largest gaming hub, Macau gaming stocks are getting caught up in the regulatory drama.

Tens of billions of dollars of market capitalization have been wiped off some of China’s largest internet companies, including Alibaba, Meituan, and Tencent, prompting some investors to ditch Chinese stocks. For example, Cathie Wood’s ARK Investment Management is selling positions in Chinese equities across its suite of exchange traded funds.

Market observers previously expected the re-tender process would go smoothly, with the worst-case scenario being an extension of current policies until Macau authorities could more accurately gauge the recovery from the pandemic. However, the regulatory crackdown, which isn’t targeting gaming operators, is taking a toll, as highlighted by LVS flirting with its lowest levels in a year and Wynn hovering near its lowest price since February.

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