HONG KONG, Nov 30 (Reuters) - The arrest of Macau's "junket
mogul" is expected to shrink business in the world's largest
gambling hub, with authorities in China underlining their intent
to crack down on what they see as a dangerous outflow of funds
from the mainland.
Alvin Chau, the CEO of gambling group Suncity Group Holdings
Ltd, is the founder of the biggest of Macau's junket
operators - outfits that bring in high rollers to play at
He was arrested on Sunday by Macau authorities over alleged
links to cross-border gambling. A warrant for his arrest has
also been issued in China.
Analysts say his arrest heralds a new era of zero tolerance
towards the promotion of gambling in China, where all forms of
gambling are illegal.
It has also dealt a blow to the junket industry that will
further erode Macau's reliance on high rollers and accelerate a
shift to the mass market.
The crackdown on Suncity has direct implications for casino
marketing staff, who promote Macau gambling to clients in
"After this, now they know that arranging players to come to
Macau, promoting gambling in China, even if its a phone call in
China, could land them in hot soup," said Ben Lee, founder of
Macau gaming consultancy IGamiX.
Bloomberg News reported on Tuesday that Suncity Group would
close all of its VIP gaming rooms in Macau casinos as of Dec. 1,
and cease salary payments for at least one third of its Macau
staff. Suncity did not respond to a Reuters request for comment.
Any closures would also harm Macau's embattled economy,
according to IGamiX's Lee.
"The loss of jobs, in the thousands, will be a huge deal for
Macau," he said.
Cross-border flows of money due to gambling have long irked
the Chinese government, and Macau authorities said their
investigation has been in train for two years.
Carlos Lobo, a Macau-based gambling consultant, said the
crackdown - which comes amid broad regulatory efforts by Beijing
to rein in a range of sectors - had only been a matter of time
after China ruled in July last year that cross-border fund flows
due to gambling were a national security risk.
Miao Shengming, an official with China's prosecutorial
agency, told a news conference on Monday that some overseas
casinos and online gambling websites primarily target mainland
clients, harming China's "economic security".
Chau's junket operations, by some estimates, account for
roughly one quarter of gaming revenues in the city known as the
Las Vegas of Asia.
The damage to them spells further earnings declines for
casino operators, already reeling since the onset of the
pandemic as China's quarantine requirements have made it too
costly for most mainland tourists to travel to Macau.
Macau logged 4.4 billion patacas ($550 million) in gambling
revenue in October, down 40% from a year earlier.
Macau-listed units of U.S. casino operators have plunged in
the past two days, with shares in MGM China slumping
15%, Wynn Macau tumbling 11% and Sands China
Macau authorities 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
Authorities in the eastern Chinese city of Wenzhou have
separately accused Chau of forming a junket agent network that
helps citizens engage in offshore and cross-border gambling
activities and setting up a company that helps gamblers make
cross-border fund transfers.
Suncity Group - which has a broad range of interests in the
gambling sector but does not include Chau's junket operations -
said Chau, who is both CEO and chairman, intended to resign.
Its stock plunged 48% on Tuesday to a record low after being
suspended from trade a day earlier, valuing it at HK$880 million
($113 million). Suncity said its operations would not be
impacted in the event that it ceased to have Chau's support.
Part of the Macau investigation involves Russia's Tigre de
Cristal resort which is close to China's northeast border and is
controlled by Summit Ascent Holdings which in turn
counts Suncity as its controlling shareholder. Shares in Summit
Ascent slid 63%.
Suncity Group said allegations in the media that Tigre de
Cristal was involved in cross-border gaming because it had
solicited customers in mainland China were untrue.
Chau could not be reached for comment. The junket operator
Suncity has not responded to requests by Reuters for comment.
($1 = 6.3717 Chinese yuan)
($1 = 7.7995 Hong Kong dollars)
($1 = 8.0330 patacas)
(Reporting by Eduardo Baptista; Additional reporting by Anne
Marie Roantree and Donny Kwok; Editing by Edwina Gibbs and Angus