GGRAsia – Chau ruling marks end of old junket system: observers

Chau ruling marks end of old junket system: observers

Jan 18, 2023 Newsdesk Latest News, Macau, Top of the deck

Wednesday’s sentencing in Macau of Alvin Chau Cheok Wa (pictured in a file photo), former boss of now-defunct casino junket Suncity Group Ltd, represents the “definitive end” of the city’s junket-driven system, suggest industry observers in comments to GGRAsia.

Macau’s Court of First Instance sentenced Mr Chau to 18 years in prison in aggregate. Judge Lou Ieng Ha said that a criminal association charge had been proven against Mr Chau and several other defendants, as well as Mr Chau’s leadership role in the criminal group.

Other charges proven against Mr Chau were: illicit gambling, including operating illicit gambling in authorised venues; and fraud. He was not convicted for money laundering.

Twelve other defendants were convicted on Wednesday on various charges. Eight were sentenced to prison terms ranging from nine to 15 years; four got suspended jail terms. Eight defendants were acquitted of all charges.

Mr Chau’s 18-year sentence “represents the seriousness with which his activities, both within Macau, mainland China and elsewhere in the region, were viewed,” stated Steve Vickers in remarks to GGRAsia. Mr Vickers is chief executive of Vickers and Associates, a specialist political and corporate risk consultancy based in Hong Kong.

He suggested the imprisonment of Mr Chau marked the “definitive end” of Macau’s junket-driven system, which “enabled significant capital outflows from mainland China”.

Industry consultant David Green told GGRAsia that Mr Chau’s sentence was likely to reflect a punishment “both for his own misdeeds, and as a proxy for other junkets”.

Mr Green is founder of Newpage Consulting Ltd and a former gaming regulator in Australia. He is also a former adviser to the Macau government on gaming.

He suggested that the court’s decision regarding Mr Chau and the other defendants was another act that “tempered” any “enthusiasm” Macau concessionaires might otherwise have had regarding using junkets in future.

More overseas business

The total number of licensed junkets in Macau – also known gaming promoters – shrank by 21.7 percent over the past 12 months, to 36 this year. It marked the tenth consecutive year of decline in the number of licensed junkets in the Macau market, showed the official data.

Separately, Macau’s Legislative Assembly approved in December a consolidating bill that regulates the licensing and activities of casino junket operators, introducing tighter requirements on the sector.

Mr Green told GGRAsia that he expects the “premium direct” gaming business to “largely replace junkets” in the Macau market. The term “premium direct” is commonly understood to refer to directly-managed VIP players.

Though, he noted, in the “premium direct” business, the “credit risk will have to be absorbed by the operators”.

“It should be a more profitable segment for them, given they will not be paying commission to intermediaries. They will be more aggressive with own-play commission/rebates,” Mr Green added.

There was also the possibility that “high roller” players could “take fright, or be concerned” that they would “no longer enjoy the degree of anonymity that the junkets were able to offer them,” stated Mr Green.

Mr Vickers also mentioned that issue. “The ‘high-roller mainlanders’ will, in future, probably select safer jurisdictions rather than take a direct risk on Macau,” he asserted.

Mr Green suggested that the scenario of junkets sourcing players from outside mainland China could become “more prevalent” in Macau, and that there “may not be the same level of concern with their activities, especially if debts incurred are legally enforceable in the home country of indebted players”.

The Macau government has stated its wish to see less reliance on mainland China customers in the city’s casinos, and more overseas players.

The city’s six gaming concessionaires have pledged to the city’s government they will invest MOP118.8 billion (US$14.74 billion) between them over the course of the next 10-year concession term. About 91.5 percent of that amount, i.e., MOP108.7 billion, will be allocated to “exploring overseas customer markets and developing non-gaming projects”.