China’s National Congress is considering making it a criminal offence for overseas gambling operations to target Chinese citizens with their promotions and offers, but analysts remain unsure as to whether this would include casinos in Macau.
The Congress wants to criminalise the ‘organisation and solicitation of casinos abroad,’ with currently unspecified punishments for companies or individuals trying to attract Chinese players. China’s highest legislature, the Standing Committee of the 13th National People’s Congress, has begun its 22nd session, with the overseas gambling amendments high on their agenda.
The Director-General of China’s Ministry of Public Security International Cooperation Department, Liao Jinrong, has said that RMB1tn (US$145.5bn) in gambling spend leaves China each year. But there is a lot of confusion amongst industry observers as to whether Macau will be included in the crackdown.
Ben Lee, founder of Macau gaming consultancy IGamiX, said: “The crackdown on the cross border transactions have finally rammed home the inconvenient fact that Macau has always been dependent on outflow of funds from the mainland.”
Bernstein analysts Vitaly Umansky, Tianjiao Yu and Kelsey Zhu however don’t believe the mainland government was referring 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 added: “China has once again taken aim at junkets and offshore gambling … Macau likely doesn’t count as offshore gambling.”
Credit Suisse analysts Kenneth Fong, Lok Kan Chan and Rebecca Law warned however: “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.”
Sands China President Dr Wilfred Wong believes any changes would only have minimal impact on the casino sector in Macau.
Dr Wong said: “Macau has never promoted gambling in the mainland, we only promote hospitality and entertainment and do not focus on gamblers/ Visitors are coming back to Macau gradually and the mass market would not face any great influence. The VIP market would be impacted to some extent, but the Chinese government had strengthened its controls on capital flows for the long term, so any amendments to the criminal law would not have renewed impact.”
“The situation would not be worse off because everyone is suffering severely in their operations over the past few months anyway,” he added. “Visitation has slumped and GGR has plunged, so in fact I believe these will improve step by step from now.”
Macau’s casino revenues have shown the first green shoots of a recovery with mass market baccarat generating MOP$1.88bn (US$235m) in the three months to September 30 2020, marking a 77.4 per cent improvement on the quarter before.
GGR across all segments grew 53 per cent compared to the second quarter to MOP$5.08bn (US$636.1m), down 92.8 per cent on the third quarter of 2019.
October’s figures are even better, with the first 18 days generating an average of MOP$222m per day (US$27.8m), up 200 per cent on September’s average.
JP Morgan analysts DS Kim, Derek Choi and Jeremy An are predicting revenue of MOP$4.08bn (US$511.2m) ‘weaker than Golden Week’s MOP$280m (US$35.1m) but well above September’s MOP$74m, reflecting the IVS resumption for non-Guangdong residents (which kicked-in in earnest after Golden Week given lead-time).’