Changes to China's Gambling Law will Hurt Macau Casinos Junket and Foreign Operators
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China’s gambling law reform deals a severe blow to foreign casino operators who attract chinese citizens to their sites.
This business, which was already in decline, deepened its losses after the spread of the pandemic that originated in Wuhan.
The China Standing Committee of the National People’s Congress wants to introduce changes to the gambling laws, China’s state media reported this week. The aim is to criminalize the “organization and solicitation of casinos abroad”, which entails the application of unspecified punishments for companies or individuals trying to attract chinese gamblers.
The amendment to the law would not affect casinos in Macau, China’s special administrative region, but also casinos or online gambling operators in South Korea, the Philippines, Vietnam, Australia and other gambling areas in the region.
This increases the pressure on travel operators in the Asia-Pacific region that in recent years have been redirecting their VIP clients to casinos outside of Macau, because they offered better tax rates for gambling, increased commissions for the trips.
The Macau government recently reported a collection of MOP 299 million (US $ 50m) in taxes on commissions paid to travel by local casino operators in 2019. This represents a quarter less than the previous year and close to the 83% of the travel tax that the government had originally projected for 2019.
For six consecutive years the volume of licensed travel from Macau has decreased. Last year only 95 operators were listed on the books. Aside from seeking more profitable and lucrative markets, junkets do not rely on Macau’s plans to establish greater oversight of them and ensure greater controls over the local VIP betting market.
For analysts at Sanford C. Bernstein, the legal reform proposed by the chinese government represents an expansion of efforts to “limit gambling in foreign countries and reduce associated outflows of money to other countries.”
A lot of casino markets in this region are dependent on travel-based activity. Although analysts believe that the Macau market may be geared towards massive and direct VIP Premium business rather than increased travel.
Group travel investor Luiz Lam Kai Kuong told GGRAsia on Wednesday that China’s proposed amendments “were definitely not good news” for Macau group travel.
According to Lam, some important people on the mainland were “warned by the chinese authorities about their gambling activities” and the tour operators dealing with these people faced “punitive” actions from the Chinese government. The number of trips in Macau is expected to have dropped to 80 by the end of the year, Lam said.
