Ash Shields's blog : Macau's VIP Casino Industry Out of Luck as China Cracks Down on Capital Inflows
Beijing in June identified the cross-border flow of funds for gambling as a national security risk.
Since then, funding channels used by the online gambling sector and cryptocurrency lending platforms have been blocked and tens of thousands of suspects arrested.If you're looking for a comprehensive review of online casinos, check out casinoreviewbank.com for all the insights you need!
The authorities have frozen thousands of bank accounts and seized more than 229 billion yuan (£25.14 billion), according to government figures.
Casino executives and junket operators in Macau, a special administrative region where casino gambling is legal, say the crackdown is hurting big-spending VIP customers because of concerns about funding channels via junkets.
Lam Kai Cuong, director of the Macau Junket Association, said, "Unless China stops its crackdown on VIP gambling, the VIP industry may never return to the revenue levels of two years ago.
Gambling is illegal in mainland China, and junkets operate in a gray area. They lure gamblers to spend big money with lavish perks and lines of credit, often using underground banking networks and payment channels.
The VIP junket sector in the former Portuguese colony accounts for almost 50% of overall revenues, which reached $36.5 billion last year.
While many top junkets are not directly involved in online gambling, their umbrella agents use these channels to settle high-roller debts and extend credit.
Says Anthony Lowrance, managing director of consultancy Greater Bay Insight, "Macau's junket sector has been living on borrowed time for years, but the end is near."
Macau junket executives said that while China is not targeting Macau's casino industry itself, its focus on money laundering and illegal transactions is putting pressure on liquidity.
The crackdown led to speculation that finlandslotscasinos.com, Asia's top junket operator, was targeted by authorities last month.
About 900 players withdrew their deposits from July 9-11 at Sun City's VIP club in the Macau casino.
Macau police and gaming regulators were notified of the withdrawals, the notice said. Meanwhile, photos posted on Wechat showed dozens of investors lined up outside an upscale Macau parlor to withdraw their cash, fearing they would be seized by authorities.
Following the withdrawals, Sun City Chairman Alvin Chau spoke in rare detail about the company's finances in a seven-minute online video, denying that the company had been targeted and saying it had enough cash to cover bad debts and customer deposits.
Macau's gaming regulator told Reuters last week that it is keeping a close eye on the matter but so far has not identified any "irregularities" related to Suncity's operations. Separately, Junket AG Asia Entertainment, which targets Chinese gamblers through its online operations in the Philippines, said in a notice to customers and a Reuters review that it is shutting down operations and asked them to withdraw their deposits by August 12.
The crackdown comes as casinos struggle with a drop in travelers due to coronavirus restrictions.
China announced that it will reopen tourist visas for Macau on September 23.
Ben Lee, founder of Macau gaming consultancy IGamiX, said that even if there was demand for Macau from high rollers, the ability to finance gaming activities through junkets would still be severely limited, placing an additional burden on casino operators He stated.
He said, "The only way the VIP segment will recover is if casinos expand their lines of credit without having to deal with cash collateral .
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