The IPO would have raised an estimated $1 billion and value the joint venture at about $5 billion. A statement by Melco said it would appeal against the decision, which would delay the listing by a few months "in the worst case scenario."

But investors sold shares of both Melco and its joint-venture partner, Publishing and Broadcasting Ltd., on concerns that the delay could damage projects in Macao, which is expected to overtake the Las Vegas Strip as the world's largest gaming market this year.Melco company secretary Samuel Tsang said in a statement that the Hong Kong stock exchange informed the company of the regulator's decision to reject the spin-off last Friday. He added that Melco plans to seek a review of the exchange's decision.

On a more positive note--as GlobeSt.com reported recently--the joint venture secured a license to operate casinos in Macau. MID has received formal approval for a gaming license, the last gaming sub-concession to be issued by the Macau government. Under the terms of an agreement, PBL handed over $900 million to Wynn Resorts Macau for the sub-concession.