An amendment to mainland China criminal law – including a fresh targeting of “cross-border” gambling activities – was undergoing a second reading on Tuesday by the country’s Standing Committee of the National People’s Congress, reported state-run media outlet, China News Service.
The agency said the legislation update included defining a specific crime of “organising and soliciting by casinos abroad”, means by which mainland residents could be taken overseas to gamble. The amendment also reportedly featured adjusted penalty terms for the existing crime of “establishment of casinos” within the mainland.
The report did not specify the proposed penalties either for the new crime, or the new penalties for the existing crime of setting up mainland casinos; nor when the proposal would be likely to come into effect.
But the report highlighted official criticism – albeit not attributed to an identified source – against “cross-border gambling”, saying that it had caused a “large outflow of capital”, as well as “serious damage to national image and economic security”.
The report did not clarify the definition of “cross-border” gambling. A number of investment analysts has said that Macau – a semi-autonomous region of China and the only place within China to have legalised casinos – is usually not considered as a “cross-border” location.
In any case, there has been a number of reports recently indicating a ramping up of cross-boundary capital controls even between the mainland and Macau, with commentators saying this might have limited the scope for Macau’s casino gross gaming revenue recovery as China emerges from the Covid-19 pandemic.
JP Morgan Securities (Asia Pacific) Ltd said in a Tuesday note following the report, that if enacted, China’s legal change might further cloud the business outlook for junket promoters, that traditionally act as go-betweens to enable rich mainland residents to gamble in Macau and elsewhere.
Analysts DS Kim, Derek Choi and Jeremy An stated: “While promotion of gambling for/by overseas casinos has already been understood to be illegal for industry participants, a clear-cut ban on such activity would undoubtedly lead to fear among many junket operators and agents, in our view, as even a personal solicitation [of a mainland player] may be viewed as… illegal under the reported amendment.”
A Monday note from brokerage Sanford C. Bernstein Ltd, which covers Macau gaming stocks, said that currently there was “uncertainty surrounding potential money flow constraints out of China” in relation to Macau casino business.
On the Chinese mainland, the operating or promotion of casino gambling in online or bricks and mortar form is illegal, as is the direct marketing within the mainland, of gambling operations based outside the mainland’s borders, including any play in the Macau Special Administrative Region.
In August, China’s Ministry of Culture and Tourism said it and “relevant departments” had “jointly established a ‘blacklist’ system for cross-border gambling tourist destinations”.
In June, China’s Ministry of Public Security revealed it had launched a web-based platform, in Chinese and English, for the public to report “cross-border gambling” as well as “telecom frauds”.
(Updated Weds Oct 14, 10.05am)
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