Changing money could key Macau casino recovery
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Macau's third-quarter losses exceeded US$1bn for the six casino concession holders. The fourth quarter gaming revenue recovered from the depths of Q3, though still barely reached 15% of 2019 levels. Corporate losses will likely contract. China's tougher approach to Macau gaming may weigh on visitor sentiment. Maca's Beijing-approved chief executive holds the power to revoke casino concessions in the name of national security. The impact of adopting renminbi for gaming transactions by mainland Chinese players could be seismic.
Macau became a Special Administrative Region of the People's Republic of China in December 1999. It retained the pataca currency, just as its SAR predecessor Hong Kong kept its Hong Hong kong dollar. The patacas are pegged to the HK dollar at 1.03 patacas per HK dollars. HK kyuan is accepted for cash payments at par with patas. Macau casinos accept HK dons for chips and machines. Some casinos take bets in pataacas. Renminbi is not freely convertible internationally, but accepted in Macao.
Digital renminbi could be used to control significant outflows into the Hong Kong dollar and US dollar. Mainland authorities can track who uses the E-CNY and control the usage. E.C. will make it easier for mainlanders to use RMB in Macau without being ripped off. iGamiX Management & Consulting managing partner Ben Lee has been talking about digital renmueh in the Macao since 2020.
Macau casinos exchange RMB for chips in limited quantities in line with China's currency controls. China’s State Administration for Foreign Exchange restricts cash travelers can carry out to RBM20,000 (US$2,906/€2.760) per person per trip. SAFE allows overseas ATM withdrawals equivalent to RM10, 000 daily.
Ricardo Siu thinks a digital renminbi policy can be implemented relatively smoothly. RMB will replace HKD in casinos in the first phase. Kevin Clayton thinks the move will be unpalatable for China. Lee expects RBS to replace Hong Kong dollars in Macau. The jackpot for Macaus is elimination of cross-border restrictions on cross border currency transfers. Kevin says it's unlikely that China will relax any rule related to gaming and gaming related transactions.
Even with digital RMB play, Beijing authorities would likely impose limits. It's still in the pilot program phase in a few parts of China. Less than a third of Macau’s 2019 gaming revenue came via junkets. The role of junket promoters is greatly diminished under Macaese gaming regulations. Vitaly Umansky believes discussing digital currency in Macao is premature. He doubts the amount of enforcement will be available. The amount and location of RBS transactions is also unknown. MacAus operators collect their revenue in Rmb. They would need to convert R MB and transfer it out of the MacAU.
Umansky is bullish about Macau gaming. Macomber believes that not all illegal money transfers and/or capital flight via Macaese gaming is created equal. Umansy expects Macao's advantage to persist as long as the Chinese government doesn't make it bad to go to Macua. Clayton believes Macai gaming will pay the price for Beijing's acceptance in renminbi.
