Macau Casino Revenues Drop
by Christine Duhaime, BA, JD, Certified Financial Crime and Anti-Money Laundering Law Specialist
Casino revenues in Macau fell 3.6% in July for the second month in a row, the first such decrease in monthly revenue in five years. The decline, caused by contraction in VIP Room gambling, was expected and is expected to continue to cause declines in the short term. It was expected for a number of gambling and money laundering law reasons: (a) the financial crime concerns with VIP Rooms in casinos in Macau is becoming more widely known; (b) the Chinese government is becoming increasingly concerned with respect to financial crimes, especially money laundering, in Macau especially amid pressure from the US; and (c) VIP Room gamblers from Mainland China are becoming reluctant to be seen (and video-taped) gambling extravagent amounts of money in Macau's casinos particularly given the corruption crackdown in Mainland China.
Junket operators bring in about 75% of all of the gambling revenues to Macau and operate VIP Roms that are not subject to the normal anti-money laundering law regime that other casinos must abide by worldwide. Not only does it create an unfair advantage as a matter of anti-trust law but it can be a breeding ground for other financial crimes, such as tax evasion and removal of state assets by what are called politically exposed persons (e.g., state officials from Mainland China) in anti-money laundering law.
The money laundering problems at Macau casinos from one US government perspective can be read here ("US Congressional Report urges Macau to implement money laundering controls").
Our summary of the junket system, VIP Rooms and financial crime concerns that was originally published in Asia Gambling Brief can be read here ("Macau junket operators use trade show to polish image" - Part 1) and here ("Macau casinos face regulatory balancing act" - Part 2).
More recently, there have been several news reports that the Chinese government is in talks with the US to recover state assets removed by politically exposed persons under the US EB-5 immigration program and much of those assets were apparently funelled to the US from Hong Kong or Macau, then to offshore tax havens controlled by Chinese nationals now living in the US. Separate and apart from that initiative, the implementation of FACTA in China will have the same result and is causing a chilling effect on wealthy families in China.