Macau feels heat of China’s crackdown

Macau: Macau’s casino junket operators are feeling the squeeze as China’s anti-corruption drive has blown a hole in the world’s biggest gambling hub. Some are shifting players elsewhere, like the Philippines and Vietnam; others are quitting the business. Chinese President Xi Jinping’s near 2-year crackdown on corrupt officials and tycoons has hit revenues at Macau’s high-rolling VIP lounges, and analysts predict this year could be the worst on record with, at best, low single-digit growth, though ‘mass market’ gamblers are taking up some of the slack.

The so-called ‘big whale’ gamblers, who don’t blink at dropping HK$1 million ($129,000) on a single bet, are thinner on the ground as China’s economy loses steam and eats away at their asset wealth. The junkets on commission from the casinos to bring in the high-rollers, lend them money and settle their debts are less willing to extend generous credit terms as it’s tougher these days to chase those debts.

And local authorities and those with ties to Beijing are leaning on the junket operators often informally over a quiet drink or hot pot dinner to gather information on Chinese officials suspected of corruption who may be laundering money through Macau.

“I can’t sleep at night. There are just too many problems,” said one 54-year-old junket operator who didn’t want to be named because of the sensitivity of the issue. “I’m not optimistic for the future of the VIP junket industry here.”

“Beijing isn’t directly controlling, but is putting subtle pressure on the authorities here. There’s more information gathering, and it’s harder now for even low-level (Chinese) officials to come here to gamble.” The Macau-born businessman, who manages VIP tables in Galaxy Entertainment Group’s golden turreted Galaxy Macau resort, said he was trying to get out of the business after more than 20 years. He noted other junkets were luring customers to casinos overseas that have greater growth potential and are further from Beijing’s prying eyes.

Of Macau’s 220 licensed junket firms, at least 15 have shut up shop in the big casinos this year, according to a recent Daiwa Capital Markets report. VIP business traditionally brought in clo-se to two thirds of gaming revenues but analysts predict that will drop to nearer a half.