What happened 

Shares of the U.S.-traded gambling companies with exposure to Macao jumped on Monday as China eased some of its travel restrictions. Shares of Wynn Resorts (NASDAQ:WYNN) jumped as much as 12.2%, Las Vegas Sands (NYSE:LVS) was up 9.6%, and Melco Resorts (NASDAQ:MLCO) rose as much as 17.9%. Shares of the three stocks were up 12.1%, 7.6%, and 17.4% respectively at 12:45 p.m. EDT. 

So what

The biggest news is that Guangdong Province in China, which neighbors Macao, is easing a quarantine requirement for visitors coming from Macao. Previously, people coming from Macao into Guangdong had to quarantine for 14 days, which effectively cut off travel from a key region for the industry. But that quarantine requirement will be lifted on Wednesday, potentially leading to a partial recovery in Macao. 

Macao's skyline from the water during the day.

Image source: Getty Images.

Another significant change is that starting tomorrow, people leaving Macao by ferry or air will need to present a negative COVID-19 test from within the last seven days. This is also aimed at reducing the spread of the virus and opening up more travel to regions like Hong Kong, which is a key travel hub to Macao.

Now what

Macao's gambling market may take a while to return to any level of normal, but even a small increase in visitors would be welcome news for resorts. Macao's gambling revenue has fallen over 90% year over year in the last three months and is down 77.4% overall this year.

The hope, for now, is that Macao stops being a cash drain for these companies and at least starts breaking even operationally. Over the next few quarters, it may even start generating cash, which would be a huge turn of fortunes. 

Investors are looking for any sign that the gambling industry will return in the near future, and for Macao, there seems to be a light at the end of the tunnel. At the same time, U.S. gambling operations seem to be in danger again now that COVID-19 cases are rising across the country. 

Given the challenges resorts and casinos will face in attracting travelers and businesses over the next year or two, I wouldn't get too excited about the gambling industry giving us growth stocks just yet. There appears to be a light at the end of the tunnel and Macao is currently leading the way -- that's why stocks are up big today. However, don't be surprised if gambling stocks continue to be volatile throughout the year. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.