On January 31, the Chinese Supreme People’s Court and the Office of the Prosecutor General issued a judicial interpretation of rules regulating foreign currency transactions in the country, and there’s a general feeling that the stringent rules may have a negative impact on the casino sector in Macau.
The new laws came into effect on February 1, and although it’s still business as usual for Macau operators, a majority of stakeholders are still unsure of how the updated regulations will affect the casino sector in the future.
Potential to hurt Junket operators
Beijing’s newly issued currency rules aim at curbing underhand foreign currency transactions, law enforcers will be on the lookout to nab those operating outside the legal bounds. A large percentage of Macau’s casino and gaming industry is controlled by junket operators who primarily rely on underground banks to move cash between the territory and Mainland China.
At the moment, no one is sure about how the enforcement will impact the junkets but some analysts have weighed in on the subject. In the opinion of the Sanford Berstein team, for example, the rules may have a severe impact on Macau casinos if the scope of enforcement is deep and broad.
The experts also think that smaller junkets and agents will be more affected than the larger operators since they may lack adequate channels and creative mechanisms to cope with the regulations. In addition, junkets may be forced to merge their operations to create more diversified and larger capital bases.
Enforcement could be a threat to legal betting
Among the possible impacts highlighted by the panel of analysts is that the tightened regulations could push licensed operators into the illegal market. In turn, this would result in a negative impact on VIP gambling in Macau, which translates to less revenue. However, the experts still maintain that it is still too early to tell what will transpire when full enforcement takes place.