Inside Asian Gaming

inside asian gaming April 2016 24 Feature In Focus Gambling tycoon Steve Wynn has said triads should not be equated with mafia. money laundering within the VIP gaming room operations, which are physically conducted within the casinos but remain outside of the casino’s official oversight.” Starting in 2013, President Xi Jinping’s anti-corruption campaign has delivered a serious blow to the VIP room business. The crackdown has made rich gamblers scared to come to Macau and disrupted the network for transferring their money. It has also damaged triad connections with corrupt local government officials used to collect debt. Interviewed in T Wing Lo’s paper, a triad member recalls how recently “a junket collected debt from an official in the mainland but was arrested by the public security, because the official misappropriated public funds to gamble.” In spite of this, however, the flow of money from China into VIP rooms remains huge. Last year it was still about half of Macau’s total GGR of US$28 billion. Within the city itself, there remains plenty of scope for avoiding oversight. A big loophole in junket legislation is that while VIP room contractors themselves have to be licensed, they can sub-contract to agents who do not. According to the US government report, “... unlike states such as Nevada, where junket operators are subject to in-depth background checks, strict internal control standards, and independent audits that are conducted in VIP rooms, in Macau, obtaining a junket license is a cursory process, and VIP rooms rely on in-house accountants to report on the financial status of their business.” “I never heard of a license being refused,” says Wang Changbin in reference to the work of Macau’s gaming regulator, The Gaming Inspection and Coordination Bureau (DICJ). “The DICJ is quite is quite closed.” Macau Legislator José Pereira Coutinho agrees. “There is no transparency on that work,” he says. “You are not entitled to information. They don’t give it to anyone, not even legislators.” IAG gave the DICJ an opportunity to provide information for this article. The Bureau acknowledged receipt of the request, but did not respond before IAG went to press. José Coutinho describes the lack of accounting for money that flows in and out of VIP rooms, and the lack of monitoring of the people that work in them as “a joke.” He says, “Casino operators say they don’t know what goes on inside their VIP rooms but of course they’re turning a blind eye. I’m not just talking about one government department. Everyone knows about the illegal behavior, but everyone lets it be.” IAG sought to interview the junket industry group, the Association of Gaming and Entertainment Promoters (AGEP), but they could not be reached for comment. Macau’s Judiciary Police acknowledges that triads operate in the gaming industry. Despite the liberalization and modernization of the industry, why has organized crime proved so resilient? The US-China Economic and Security Review Commission’s 2013 report cites a Chinese study that estimates “30-40% of all capital moving through underground banking channels is dirty money being laundered.” Macau’s regulatory oversight of VIP rooms, the report says, “remains opaque and prone to substantial abuse.” “When you go against folks who are essential to the running of the system you run the risk of hurting the system,” says Henry Pontell. “So enforcement is usually nibbling around the edges, with no systemic change.” operators run an underground banking system for moving money out of China. Much of the money flowing into VIP rooms, T Wing Lo says, is there to be laundered, “mainly because of the rampant corruption in China.” The US-China Economic and Security Review Commission’s 2013 report cites a Chinese study that estimates “30-40% of all capital moving through underground banking channels is dirty money being laundered.” Macau’s regulatory oversight of VIP rooms, the report says, “remains opaque and prone to substantial abuse.” Consequently, “In Macau there is an even larger risk of