GGRAsia – Junkets surprised by proxy betting ban: industry body

Junkets surprised by proxy betting ban: industry body

May 10, 2016 Newsdesk Latest News, Macau, Top of the deck

The Macau junket sector has been caught by surprise by the government’s decision to forbid – with effect from Monday this week – the use of telephones at VIP gaming tables, the head of the largest association of Macau VIP gaming promoters told GGRAsia.

“The measure [banning phone usage] came quite suddenly for us,” said Kwok Chi Chung, president of the Association of Gaming and Entertainment Promoters, in comments to GGRAsia.

He added: “With the ban, we expect that sector-wide monthly turnover for junkets in Macau will decrease by about 10 percent year-on-year.”

The authorities in Macau have clarified that with effect from Monday, the use of phones at gaming tables will not be permitted. In practise, that means an end to proxy betting. Prior to Monday, VIP clients could use their phones while gambling, provided they had registered for that purpose.

Proxy betting was already not permitted in Macau. But because some VIP players could use their phone at the gaming tables, that generated a loophole in the system and informal proxy betting was still taking place, say industry sources, adding that this was only happening in the high-roller segment.

In a Monday note, Union Gaming Securities Asia Ltd analyst Grant Govertsen had mentioned that some junket operators had been “taken by surprise” by the ban on phone usage at gaming tables.

Mr Govertsen added at the time: “It doesn’t appear the concept of banning [on a de facto basis] proxy betting had come up in any meaningful way as part of the ongoing discussions the junkets are having with Macau’s gaming regulator as they attempt to enhance the regulatory environment for VIP. In the eyes of the junkets, this likely appeared to be an unwelcome 11th hour surprise.”

The ban on proxy betting in Macau comes amid China’s anti-corruption campaign. The drive includes measures to curb graft by public officials, and the laundering of money gained via acts of corruption such as influence peddling or theft of public assets.

In his comments to GGRAsia, Mr Kwok of the Association of Gaming and Entertainment Promoters said several Macau junket operators now would redirect their proxy betting operations to other markets in Asia.

“Many of the [VIP gaming] operators will shift their phone bets to other Southeast Asian jurisdictions like Philippines, Vietnam or Cambodia,” Mr Kwok stated.

Brokerage Sanford C. Bernstein Ltd said in a Monday note that the key issue regarding the Macau ban on phone use at VIP gaming tables was implementation. “To our knowledge, it is likely a self-policed policy,” analysts Vitaly Umansky, Simon Zhang and Clifford Kurz wrote.

They added: “The onus is on casino operators to enforce the implementation and to ask junkets/players in VIP rooms to refrain from using phones by gaming tables. Based on our recent channel checks, the extent of enforcement varies by casino.”

The text of the Macau government’s directive banning phone usage from gaming tables has not been made public. It is unclear what penalties – if any – casino operators and/or junket operators risk if they fail to implement the ban.

Addressing on Monday the topic of how the ban might be implemented, Macau’s Secretary for Economy and Finance, Lionel Leong Vai Tac, stated in general terms that the government would boost oversight to ensure the measure was being followed. He added that it was a responsibility of the entire industry – including casino operators and junkets – to ensure the ban was fully implemented.