A series of recent policy declarations coming out of mainland China regarding new measures aimed at combatting cross-border gambling have raised the question of whether Macau is one of the jurisdictions in Beijing’s crosshairs.
The prevailing wisdom has typically been no.
In a note published by brokerage Bernstein last week following the news that China may amend its criminal law to create a new crime against foreign casinos targeting Chinese players, analysts Vitaly Umansky, Tianjiao Yu and Kelsey Zhu were adamant that mainland government pronouncements on overseas gambling do not refer to Macau.
“Macau is never discussed in terms of ‘overseas’ or ‘foreign’ as Macau is part of The People’s Republic of China and Macau has a legal casino market that supports much of the city’s economy and provides much of the government’s revenue,” they said.
Union Gaming’s John DeCree offered a similar view on Monday, noting that while “China has once again taken aim at junkets and offshore gambling … Macau likely doesn’t count as offshore gambling.”
But there is reason to believe otherwise.
On Monday, Credit Suisse published a note in which research analysts Kenneth Fong, Lok Kan Chan and Rebecca Law argue that Macau is very much viewed by China as a cross-border gambling destination – both in law and by way of recent precedents.
Legally, they observe, China’s Ministry of Justice clearly defines exiting or entering the mainland to Macau and Hong Kong as ‘crossing the border‘, as per Exit and Entry Administration Law Chapter VIII. This is also seen in the fact that Macau and Hong Kong each have their own visa policies, and that mainland Chinese residents require a visa in order to visit the two SARs.
More compelling, however, are recent statements from provincial governments in China specifically naming Macau in their efforts to combat cross-border gambling.
In April, the Jiaxing government announced the launch of a three-year “chain-breaking operation” targeting junket operators it said were organizing tours and “the purchase of air tickets to casinos in Macau, the Philippines and other places for gambling in private rooms.”
Promising to “attack the entire black industry chain involved in gambling, including the so-called ‘underground banks’,” the government also called on members of the public to “consciously resist going abroad.”
In June, the government of Nantong revealed that 18 people linked with junkets had been arrested for “organizing domestic entrepreneurs to go to Macau for gambling,” including bringing players to Macau, taking commission from Macau casinos and providing capital for players.
A month later, in July, the Guangdong Provincial Public Security Department said it had arrested more than 60 people related to “criminal gangs” that had illegally provided funds and arranged cross-border transfer funds for gambling overseas, including in Macau.
All three cases, insist the Credit Suisse analysts, support their thesis that Macau is seen as a cross-border gambling destination.
“After the central government publishes the rules and regulations, it is the provincial levels that execute that,” they state.
“Although the crackdown rules have not provided a clear definition of the meaning of ‘cross border’, at the provincial government level we note that Macau, including the junkets, casinos and shadow banking, are being named time and again on their list of crackdowns.”
In August, China’s Ministry of Culture and Tourism announced that it had established a “blacklist” of overseas tourist destinations it said were disrupting the nation’s outbound tourism market by opening casinos targeting mainland Chinese customers.
While none of those destinations were named, the Ministry said at the time that the new blacklist system would see travel restrictions imposed on Chinese citizens going to overseas cities and scenic spots named on the blacklist.
Given that COVID-19 has already severely restricted the possibility of international leisure travel for the foreseeable future it’s impossible to get any sort of gauge on how, when or where such restrictions might be implemented.
One prevailing wisdom over the years has been that, while China stands overwhelmingly opposed to its citizens gambling, it would much prefer they do so in Macau than anywhere else. Will such special treatment continue into the future?
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Notably, the Chinese government didn’t hesitate to reinstate the Individual Visit Scheme from August, allowing its residents to once again visit Macau – albeit pending a lengthy approval process that has so far failed to yield any significant uptick in visitation to Asia’s casino hub.
However, with COVID continuing to rule the roost, perhaps only time will tell exactly what China has in mind for its troubled son.
