Recent measures by the Chinese government to tackle online gambling are having a significant impact on Macau, the world’s largest gambling hub. The crackdown is part of the Chinese government’s efforts to tackle capital outflows, but it could not have come at a worse time for the Macau gambling sector, which has already been struggling under the impact of sluggish economic growth, the online Chinese-US tensions and the coronavirus lockdowns.
Back in June, Beijing started focusing the cross-border flow of funds used for gambling as a potential national security risk. The result has been that most of the financing channels used in the online gambling industry, along with many cryptocurrency lending platforms, have had the plug pulled. Arrests have been made, numbering in the tends of thousands, while authorities have frozen thousands of bank accounts. According to statements by the Chinese government, they have also seized over $32.95 billion, and there has been an ongoing purge of illegal gambling rings.
According to casino executives in Macau, the crackdown is
having a big impact on high spending VIP customers who are finding their
financing channels restricted. The director of the Macau Junket Association,
Lam Kai Kuong, said that the VIP sector may never return to the levels of revenue
it saw two years ago unless Beijing changes its approach to VIP gambling.
Macao junkets operate in a legal grey area, enticing big spending gamblers through luxury perks and credit lines, which often depend on underground payment networks and channels. But it has been estimated that the VIP junket sector is worth almost half of Macau’s $36.5 billion revenue. Although many of the leading junkets are not themselves involved in gambling, many of the agents working for them are using the cover of the junkets to settle debts and arrange credit for VIP gamblers.
The crackdown adds to the difficulties that Macau faces as casinos struggle with the significant reduction in travellers caused by the coronavirus restrictions. China has said that tourist visas to Macau will be issued from September 23. But according to some analysts, even if there was a significant demand from big spending Chinese players, the new restrictions on the junkets’ ability to finance gambling would put casinos themselves under more pressure.