Aug 09, 2019 Newsdesk Latest News, Macau, Philippines, Top of the deck
Mainland China’s vow to increase enforcement against cross-border gambling activities targeting Chinese nationals will not hurt Macau and could even benefit the city’s casino operations in the long term, says brokerage Sanford C. Bernstein Ltd.
The Chinese embassy in the Philippines said in a statement on Thursday that the mainland authorities attach “great importance to the crackdown on cross-border gambling activities”.
“This gesture by Chinese government could be seen as a warning to junkets and online gaming operators about gaming activities outside of Macau,” said a team of Sanford Bernstein analysts in a Friday note.
Macau is the only place in China where casino gambling is legal. The country does not allow online gambling.
“We do not believe any of these statements refer to Macau or any attempt by China to stem Macau activities,” Sanford Bernstein analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu wrote.
“In the longer run, this could be positive for Macau as some gaming demand may return to the territory,” the memo said, adding that Chinese authorities would likely “be taking a stronger stance in trying to curtail gambling overseas (outside of Macau)”.
Thursday’s statement from the Chinese Embassy in the Philippines said that “the fact that the Philippine casinos and POGOs [Philippine Offshore Gaming Operators] and other forms of gambling entities are targeting Chinese customers has severely affected” China’s interests.
“[A] huge amount of Chinese funds has illegally flown out of China and illegally into the Philippines, involving crimes such as cross-border money laundering through underground banking, which undermines China’s financial supervision and financial security,” the Chinese embassy stated.
In its statement, the Chinese embassy urged for support from the Philippine authorities to crack down on gambling-related crimes, including money laundering and illegal employment of Chinese citizens.
POGOs are said to be expanding aggressively in the Philippines. Authorities in the country are trying to reign in on the expansion and trying to regulate better these operators, including to account for foreign workers in the industry.
“If the warning is not heeded by the offshore operators, then China will likely begin a broader crackdown, which would be negative for POGOs and Philippine casinos,” Sanford Bernstein wrote in its Friday note.
It added that such a move could negatively impact Melco Resorts and Entertainment Ltd, a developer and operator of casino resorts in Macau and in the Philippines, including City of Dreams Manila.
“Although Melco has already curtailed proxy betting at the property as of July, Chinese make up the majority of VIP players at the property,” the brokerage said.
Proxy betting is a practice whereby an agent or third party – usually a junket representative – makes a bet in person on a VIP room table game, on behalf of a client ordering the wager via a mobile online device or telephone.
Proxy betting was effectively banned by the Macau government in 2016, and has since become popular in the Philippine casino market, according to a note issued by investment bank Goldman Sachs (Asia) LLC last month.
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