Macau gambling thrives because of gamblers from China. Problem is the Beijing government prohibits travelers to the semi-autonomous enclave from leaving the mainland with more than $3,150. Obviously, that is not enough cash to fuel a gambling binge that reached $38 billion last year.
So, in comes the VIP room operator, whose junkets bring to Macau thousands of gamblers who play with special chips that are provided on a loan basis. Thus, the gamblers are able to wager huge amounts without violating the Chinese money restrictions.
There lies the problem being faced by Macau casino operators, three of whom are Las Vegas based companies, MGM Resorts International (MGM), Wynn Resorts Ltd. (WYNN) and Las Vegas Sands Corp. (LVS).
“Criminal transactions are widely alleged to take place just out of the direct purview of the casino,” said A.G. Burnett, chairman of the Nevada State Gaming Control Board, who testified last week before the U.S.-China Economic and Security Review Commission in Washington.
Congress created the commission a number of years ago but it only recently has been reviewing the Macau gambling activities.
While Macau was a Portuguese colony, the place was considered a den of hoodlums with Chinese triads controlling the gambling. At that time, there was only one major casino operator, Stanley Ho, who has consistently denied any involvement with crooks.
When the new government was established a dozen years ago, Macau officials declared they would rid the community of its bad element.
But gambling is still viewed by many as a problem.
“The structure of the casino system in Macau effectively allows people to use the casinos to circumvent these capital controls,” According to William Reinsch, commission chairman.
At last week’s hearing, Burnett complimented China on its efforts to reduce corruption but pointed to the problem created by travel limits.
“The risk, if I can speak frankly, is China’s and I know that they are trying to crack down on corruption and items that may bring disrepute to them,” said Burnett. He added that changing currency controls could possibly ease that risk.
Ray Poirier is the longtime executive editor at GamingToday.
Contact Ray at [email protected].