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NEWS EXTRA
Could China’s leadership
change impact Macau?
Innovate Gaming looks at a situation that could change massively in
March, with a change at the top in China
Since China’s government eased visa
restrictions for its citizens to enter
Macau back in 2009, gaming in the
former Portuguese enclave has gone
from strength-to-strength.
Following the ‘once-a-decade’ leadership
change in China that will take place in March,
industry observers question the longevity of
gaming in Macau.
A new generation of leaders has taken over
the ruling Communist Party of China (CPC), as
the country faces a new range of opportunities
and challenges, both domestic and
international. Under the CPC’s reign, China has
been a global success story, with its rapid
growth leading the country to a dominating
economic force.
The 18th party congress elected Xi Jinping as
the new general secretary of the CPC and a
group of younger officials to takeover the
leadership. The new leaders might be uneasy
about the regulations that have enabled
Chinese citizens to spend vast sums of money
in Macau’s casinos, generating huge profits for
both local and US operators.
Macau’s
government
tourist office
projected
that more
than 30
million
people,
the
majority from mainland China, entered the
semiautonomous Chinese region in 2012. Gross
gaming revenue in Macau increased 15 percent
year-on-year during the period.
To continue supporting domestic growth in
China, policy makers will rely on money being
funded back into the local economy, rather
than being leaked elsewhere. A report
published in October 2012 by the US-based
organisation Global Financial Integrity,
estimated that $472 billion left China in 2011
and the country lost $3.79 trillion over the
last decade.
Policies aimed at clamping down on the
country’s extensive corruption, a principal
threat to the CPC, could stem the flow of
gamblers and money to Macau. “Corruption”
inferred Xi in his first speech as party leader
last November, could “cause the collapse of the
party and the fall of the state.”
Chinese law currently prevents citizens from
taking more than $50,000 out of the country
each year, but it has been easy to get around
the restrictions. Largely aided by junket
operators, wealthy Chinese gamblers visit
Macau to play high-stakes games and it is not
uncommon to see chips up to the value of
$10,000 on the tables. Debts and facilitation
fees demanded by junkets operators are often
repaid in China.
Steve Vickers, CEO of business intelligence
firm SVA said that Macau is an obvious first
target for the Chinese government. “The
primary risks to the gaming sector comes from
the Chinese side,” said Vickers, “It will come
from the end of acquiescence to this vast capital
control abuse and crackdown on corruption.”
Techniques used to move money from
An innovative online representation of
land-based, interactive and social
gaming, Innovate Gaming keeps the
industry up-to-date, informed and
inspired.
www.innovategaming.com
China to Macau could be quickly made
difficult to continue. It is commonly known
that credit cards are used to buy expensive
gifts at the many luxury boutiques in Macau
and then players immediately obtain a
refund in untraceable cash from the retailer.
Other methods include using companies to
issue inflated invoices to pay for crossborder
transactions.
“Everybody knows the bulk of Macau
gamblers are high rollers, and they’re all from
mainland China,” proclaimed Liu Bolong, a
Professor at Macao University, “The new
leadership, I’m sure, will begin the process of
anticorruption activities and this will affect
Macau in a very substantial way because many
of these high rollers, their money is coming
from illegal practices.”
Hoffman Ma, CEO of Macau casino Ponte 16,
said the Chinese government took hold of
Macau when it tightened visa restrictions,
hurting the gaming industry. “Visa restrictions
years ago showed the power of the Chinese
government to control Macau’s gambling
revenue if they want to,” he said.
© SPIELO International, 2012
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10 JANUARY 2013