A new gambling era in China with no tolerance for mainland cash outflow
According to company sources, Suncity Group has closed all VIP casino Clubs located at properties owned by all six of Macau’s casino concessionaires, including clubs at Galaxy Entertainment Group’s casinos in Galaxy Macau and StarWorld, which had hoped would stay open. At one point in 2019, the group operated 17 clubs throughout Macau, accounting around 45% of the city’s VIP market.
However, the company’s future is now uncertain following group CEO Alvin Chau’s arrest and imprisonment by the Macau Judiciary Police and awaiting trial for alleged criminal association, illegal gambling, money laundering.
Macau acted on orders from China’s Wenzhou Public Security Bureau, which accuses Chau of “opening casinos in China” via the operation of cross-border gambling operations on behalf of Suncity Gaming Promotion Company Limited (SCGPCL).
Hong Kong-listed Suncity Group, which operates Hoiana in Vietnam, is a majority owner of Tigre de Crital in Vladivostok, Russia and is developing a US$1 billion hotel and casino in Manila, has revealed that Chau intends to stand down as CEO and director.
China is adopting a zero-tolerance approach to the promotion of gambling in the mainland where it is illegal and is seeking to rein in the flow of Chinese gambling-related funds into Macau and other gaming hubs. China considers such finance outflow a national security risk.
The closure of Suncity’s gaming rooms has only exacerbated pain for Macau-listed casino stocks which have tumbled this week on the expected loss of business from Chau’s junket business which is estimated to account for around a quarter of Macau’s gaming revenues.
Macau authorities have accused Chau and 10 others of using the former Portuguese colony as a base for an illegal “live web betting platform” in the Philippines that attracted mainland Chinese gamblers.
A new gambling era in China
China’s tougher stance comes amid a broad regulatory clampdown in the country on a range of sectors including tech and property and signals a new era for gambling in Macau and its relationship with mainland China.
Ben Lee, founder of Macau gaming consultancy IGamiX, said: “It means that China will no longer tolerate Macau promoting in any form or manner gambling into the mainland.”
Authorities have learnt they are able to control the flow of visitors into Macau with the advent of COVID-19 border controls, and now are moving on to controlling the type of visitors and that the special administrative region would now have to rely on mass-market gamblers instead of high-rollers.
Casino operators in the former Portuguese colony have recorded historic losses since the onset of the pandemic as China’s quarantine requirements have made it too costly for most mainland tourists to travel there.
The Macau units for U.S. casino operators Sands, MGM and Wynn each saw revenue plummet roughly 80% last year and the sector will also now have to contend with the potential threat to tourism posed by the new coronavirus variant Omicron.
