Apr 23, 2015  If Macau’s casino and resort industry is to survive the crackdown, it has to change: the ultra-rich gamblers may not be there in such numbers as before, but the culture of luxury gambling trips. Fresh Beijing crackdown on dirty Macau cash anticipated as VIP casino revenues surge. A surge in VIP takings at Macau casinos coupled with an unprecedented warning from its biggest junket. Macau hit by gambling crackdown Macau is trying desperately to diversify its economy away from gambling, but a leading casino magnate says the territory should be careful about going too far.

UnionPay is the only Chinese bank-card network operating in China. On Friday, the company announced it would look into money laundering and capital flight “in and around the booming casinos” of Macau.

The money laundered in “cloaked gambling revenue” is estimated to be in the $90 billion range. UnionPay says their bank cards are being used to bypass Chinese currency regulations. A Chinese news report said “hundreds of illegal hand-held payment devices” have been used for such transactions. These analysts believe up to $6.5 billion of illegal money is handled each year by the UnionPay bank cards.

Hollywood casino gift shop hours. It is located in the back of the Hollywood Casino Gulf Coast and not accessible to customers, so contact the bakery directly or ask for help in the casino to order. Bakery items can also be purchased directly from the Celebrity Grill.

Macau Stock Prices Plummet on News

As the news of the crackdown reached stock traders, casino company stock prices went down significantly. Las Vegas Sands Corp. dropped 4% in trading, while Wynn Resorts also dropped 4%. MGM Resorts International backed off 3%. Melco Crown was worst-hit by the stock selloff, as its stock lost 6% of its value. Of the various companies listed, Melco Crown Entertainment is the only one with 100% of its assets based in Macau. In recent weeks, the company had delivered strong Q1 financial reports, so stock prices had climbed.

Analysts say the damage to the stocks is minimal, though. The long term trends point to a healthy, even booming, gaming sector. Despite the drop in value, Las Vegas Sands Corp’s last few months is said to mirror the Nasdaq. Wynn Resorts’s stock price had met “sharp resistance”, so it was not likely to climb any higher.

Rising Profits Invited Closer Scrutiny

Land-based gambling revenues have been on the rise in Macau over the past few years. China is undergoing a brick-and-mortar poker boom comparable to the one which happened in the American online gambling industry in 2003-2005. Like that gaming phenonemon, it appears the influx of cash has gotten the attention of financial experts. The one major difference is the central government is dedicated to the gaming industry in Macau, while it was hostile to online gambling in the USA.

UnionPay might seem like a financial institution and not a government organization, but such a crackdown has deeper implications than it would in the United States or other democratic nation. UnionPay is naturally going to have closer ties to the Chinese government than such institutions do in the west. Investors.com termed the action by UnionPay a “state crackdown“.

With the hundreds of millions spent using such cards in Macau each year, the potential financial damage such an clamp-down might have in Macau is profound. Macau casinos increased revenues 11% from 2012 to 2013, with a total of $3.92 billion collected. In fiscal year Quarter 1 this year, the increase in revenues is 20%.

Recent Police Raids in Macau

Signs of a coming crackdown had been evident. In recent months, Macau police carried out raids in and around casino complexes. Though this represented only a handful of raids, these tentative actions led to a wider understanding of the problem.

When authorities realized the full scope of activities was huge, the national Chinese government felt it could no longer ignore the crimes. Large amounts of potential tax revenues were being lost, for regional and national treasuries.

Macau casino revenues exceeded $39 billion last year. Anytime large quantities of cash pass through an area quickly, graft and corruption will exist. A gaming destination like Macau is going to draw in fraudsters and money launderers, knowing this fact. This may work for a time, but when a certain line is crossed, authorities notice and take measures. Certain merchants in Macua have been calling for enforcement of the laws for some time.

Macau Pawnbrokers Have Complained

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Macau’s pawnbrokers have been lobbying for the UnionPay crackdown. Casino gamblers who fall into debt often trade valuables at the pawnshops of Macau. People having the option of the UnionPay devices may have cost pawnshops up to 40% of their trade.

While casino operators who lose money to fraud write off the losses, local pawnbrokers consider their trade to be a livelihood. The UnionPay fraud might be the difference in success or failure for the business.

The pawnbrokers represent local businessmen, which government and financial authority figures are likely to listen to. This tendency is spurred on by the sure knowledge that those laundering money are also avoiding paying taxes. With a figure like $90 billion at stake, it was only a matter of time before the establishment in China began looking into such transactions.

(Bloomberg) — China is stepping up a crackdown on gambling activity by its citizens offshore, threatening what has become a lucrative industry for gaming operators in places like the Philippines.

China’s embassy in Manila put out a strongly worded statement Thursday, saying that its citizens are being targeted by casinos in the Southeast Asian nation, and that hundreds of millions of yuan are flowing illegally out of its borders to the region.

The statement, which said all forms of gambling by Chinese people in overseas casinos are illegal, follows a run of Chinese state media coverage critical of internet and phone gambling over the past month. In a Xinhua story July 12, China’s minister for public security, Zhao Kezhi, said it was necessary to crack down on the “cross-border online gambling problem” because of public concern.

The gaming regulator in Macau, the only place in China where casinos are legal, has also forbid junket operators licensed there from using the territory as a settling platform for gambling services provided elsewhere, according to people familiar with the matter.

“A conservative estimate shows that gambling-related funds flowing illegally out of China and into the Philippines amounts to hundreds of millions of yuan every year,” said the Chinese embassy statement. “There are analysts who believe that part of the illegal gambling funds has flown into local real estate markets and other sectors in the Philippines.”

Online and phone betting in Southeast Asian countries by Chinese punters many miles away has exploded in the last few years and is transforming the developing cities. In the Philippines alone, more than 50 offshore gambling companies have received permits to operate, hundreds of thousands of Chinese workers have surged into Manila to staff the industry, and property prices near gaming sites are booming. Revenue from the offshore gaming industry is projected to reach up to 9 billion pesos ($172 million) this year, according to the Philippines gaming regulator.

But the flow of Chinese gambling to Southeast Asia has meant slowing growth in Macau, the Beijing-controlled enclave that’s the world’s biggest gambling hub. A desertion by high rollers in particular — which account for 55% of Macau’s $40 billion in annual revenue — has put pressure on casino operators there and forced them to widen their appeal by building theme parks and concert halls for middle-class tourists.

There are signs that the offshore services are penetrating more deeply into China’s population than expected. Some online gaming websites offer punters wagers as low as 10 yuan ($1.42) and have round-the-clock live streams, making them easily accessible by lower-income Chinese in rural areas, who do not have the means to go to Macau or other ways of scratching the gambling itch.

The Chinese embassy statement said that the rise of online gambling has resulted in an increase in crimes and social problems in China, and that in connection with telecom fraud has “caused huge losses to the victims and their families”.

Offshore gaming is divided into two main categories. In online gambling, small-time bettors gather at cyber tables that can accommodate 500 gamblers at a time. Then there is proxy betting, its richer, better-dressed cousin, where high rollers communicate with staffers wearing headsets at baccarat tables in offshore casinos. Proxy betting now accounts for 40% of the $1 billion VIP gaming market in the Philippines, according to brokerage CICC.

The ban on junkets using Macau as a settling platform for overseas gambling services kicked in from Aug. 1, said the people, who asked not to be identified as the order has not been made public. Macau’s Gaming Inspection and Coordination Bureau declined to comment on the directive sent to junket operators.

Junkets and Macau-based casinos with operations in Southeast Asia are already starting to halt proxy betting and video gaming services. Concern over the crackdown has hit Macau casino stocks, with a Bloomberg Intelligence index of the biggest companies down 15% since the first critical media reports were published on July 8.

Suncity Group — the world’s biggest junket operator, which works with almost all Macau-based casino operators — ended proxy betting activities last month, said Maggie Tang, a spokeswoman for the company.

The halt reduced the amount of incoming bets, which total about $230 billion annually, by around 10%, a person familiar with the matter said, asking not to be identified as the information is not public.

Melco Resorts & Entertainment Ltd., one of Macau’s biggest gaming operators, asked its junket partners to stop all proxy betting at its Manila resort last month on concern it could face reprisals in Macau, according to people familiar with the move. The regulator is set to renew casino licenses in the territory next year, for the first time in two decades.

Proxy betting is a channel for money laundering, according to a 2017 U.S. government report, because the practice allows players to conceal their identities. Some Philippines lawmakers want casinos to be placed on a list of institutions monitored for money laundering due to high profile incidents, like a 2016 heist of $81 million from Bangladesh’s foreign reserves, which were routed through a Philippine casino, a junket operator and a gaming-room promoter.

Contact editor Yang Ge (geyang@caixin.com)

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