Junket Operators In Macau Get $32.9bn Hit By China
China has launched another massive crackdown on Macau and the junket operators who finance and handle the country’s extensive VIP sector, closing thousands of bank accounts associated with the operators.
Industry experts and analysts believe that the frozen bank accounts totaling 229 billion Yuan ($32.95 billion) were seized due to China’s concerns about the cross-border flow of gambling funds.
China has enforced a stringent crackdown against gambling in recent weeks. Recently, 178 people were arrested for gambling-related crimes in Jiangsu province and Nantong city. In Suzhou, more than 1,200 people were arrested by Chinese authorities for trying to sneak locals into Macau and for setting up illegal casinos.
Anthony Lawrance, MD of consultancy business for Greater Bay Insight, stated that China appears to want to eliminate middlemen in order to exert more control over the flow of Yuan to Macau.
Junkets Operating in Gray Areas
Junket operators were hit especially hard as the seized funds effectively stopped their businesses.
Junket operators generally conduct their business in a gray area, as China restricts its outbound tourists from carrying too much money. When Chinese high-rollers travel to Macau, they can eschew cash and simply arrange for a credit line with a junket operator. Once these high-rollers return to China, they repay their debts to the operators, with most of the payments being made underground—such as online payment processors and non-state banking methods.
Suncity, Macau’s largest junket operator, recently underwent a bank run last month, with 900 of its players reportedly withdrawing funds in just one weekend in July 2020. Suncity has denied that the run impacted their long-term business. Alvin Chau, Chairman for Suncity, claimed that they still have enough liquidity to pay off all bad deposits and debts.
The latest victim of the Chinese crackdown is AG Asia Entertainment, whose client base is comprised mostly of Chinese citizens gambling in the Philippines. AG Asia Entertainment has provided its customers with a deadline for withdrawing their funds.
Macau Gaming Still in Freefall
The Macau gambling industry as a whole has suffered tremendous losses due to the COVID-19 pandemic. Based on the latest figures available, the revenue generated by the Macau gambling sector for July 2020 was just $168 million—the figure represents a 95% drop from the figures for July 2019.
China is continuing its strict travel and visa policies for gamblers going to Macau, but has indicated that they plan on resuming Macau tourist visas for locals starting September 23, 2020.
Carolyn is our legislation expert, with a background in law she is able to cover the current state of gambling around the world