Inside Asian Gaming

April 2016 inside asian gaming 25 In Focus An obvious reason is that, in gaming or any other industry, an overly zealous enforcement of rules is bad for business. Take the case for a full paper trail for funds flowing into VIP rooms. Strictly speaking nearly all of that money is in a sense ill-gotten, because tax evasion is rampant in mainland China. Rich people there generally pay little or no tax. When they do, it’s common for the government to write and thank them. On top of this, gambling is generally considered shameful by Chinese; behavior they want to hide from relatives and peers. Many prefer the anonymity that comes from using cash. “I don’t think any VIP high roller would want to fill out a form or give bank references or collateral or anything like that,” says Peter Zabielskis. One junket regulation loophole might be closed by requiring everyone financially transacting with gamblers directly or indirectly to apply for a license, subject to background checks. But there would be problems with this too. First, many cooperators come from mainland China. It would not be easy to get information needed from authorities in their place of origin in order to vet them. Second, gaming promotion is illegal in China. Many junket agents canvass there under the guise of general tourism, or even in secret. Licensing would identify them to the mainland authorities, and subject them to arrest. In truth, it may well be that triads are too important to gambling in Macau to be gotten rid of. Macau’s gaming industry depends on the VIP room system, which in turn depends on triads. Too many people are making too much money to want to change the setup. A full assault on them might capsize the boat. “When you go against folks who are essential to the running of the system you run the 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. risk of hurting the system,” says Henry Pontell. “So enforcement is usually nibbling around the edges, with no systemic change.” In future, a bigger threat to triads than Xi Jinping’s corruption crackdown would be the legalization of the illegal markets they control. Liberalization of cross-border money flows, in other words, to cut them out as middlemen. The benefits of cash smuggling would be reduced if China fully implemented its tax code. And if Macau’s casinos were allowed to market directly in China and issue credit that was recognized by courts there, the gangsters might ultimately be reduced to loansharking. Until these things happen, however, organized criminals will likely remain a part of Macau’s casino industry. Steve Wynn seemed to be saying as much when, speaking at a Massachusetts Gaming Commission hearing in 2013, he said triads should not be equated with mafia. “Experienced law enforcement people will tell you that triad is not a synonym for organized crime,” he said. Triads, in other words, may be too big to be bad.