The Macau government wants to dig deeper into problems found in some of the credit issuance records of the city’s VIP gaming promoters, a group of businesses also known as junket operators. The move was mentioned in the government’s policy address for 2018, presented on Tuesday.
According to the document presented by Macau’s Chief Executive, Fernando Chui Sai On (pictured), authorities will attempt to draft “guidelines to hold specific audits on the problems found” during an ongoing general audit of Macau’s 126 junkets.
As an example, the policy address mentions plans to review these companies’ “minimum internal control requirements in terms of information technology”.
The ongoing general audit, which was launched earlier this year and is to be concluded by the end of 2017, will also look into “temporary deposits” accepted by junket operators.
Macau junket operators have commonly raised capital for their casino rolling chip programmes by offering private investors above-market-interest rates for their deposits. That capital was then used to extend credit to VIP players mostly coming from mainland China.
However, cases of internal fraud in recent years involving some Macau junket operators have led to some private investors losing significant amounts of money invested via such schemes, which are not protected under the provisions of Macau’s financial services rules.
In response, the Macau government vowed in October last year to introduce new, stricter regulations for VIP gaming promoters. The sector has itself proposed that higher capital deposits should be required from gaming promoters.
In a press conference following his policy address speech, Mr Chui singled out a reform of the city’s legal framework for the casino industry as the priority for this sector.
He stated the government had “not much to announce” regarding what will happen in the run up to when the concessions of the six current Macau operators expire on various dates in either 2020 or 2022. But he said that mid-2018 would be an “appropriate” time to provide more details regarding any extension of gaming rights for Macau’s current gaming concessions and sub-concessions.
Mr Chui additionally forecast Macau’s 2018 casino gross gaming revenue (GGR) would total MOP230 billion (US$28.6 billion). The government forecast for 2017 was MOP200 billion. Macau market’s tally for the first 10 months of 2017 stood at nearly MOP220 billion, up 19.2 percent from the prior-year period, according to official data.
‘Terrorist attack’ training
During Tuesday’s address, Mr Chui said simulated “terrorist attacks” would be held in 2018 as part of the training regime for the city’s security forces, namely at the airport and in entertainment venues.
Last month Macau’s six casino operators agreed to work with the city’s Judiciary Police on how to cope with a simulated “attack” on the city’s gaming sector.
A Macau government statement released after the meeting referred to a “gunman attack and arson” that took place in a “neighbouring country” – understood to be a reference to the lone-gunman attack on Resorts World Manila in the Philippines in June – and also referred to the shootings on the Las Vegas Strip in the United States last month.
Those events claimed in aggregate more than 94 lives, and in the short term caused some damage to the image of those local casino industries, industry commentators have said.
The 2017 Asia Risk Assessment from Steve Vickers and Associates Ltd, a specialist risk mitigation, corporate intelligence and risk consulting company based in Hong Kong, said that the Macau casino industry was “vulnerable” to the threat of terrorism.
Chau Wai Kuong, director of Macau’s Judiciary Police, indicated in last month’s statement that Macau had “relatively lower” risk of attack, but should not be complacent.
The government’s policy address includes plans to create in 2018 an independent anti-terrorism group “with deep resources,” as well as plans to start drafting “a full terrorism prevention and warning system”.
(Updated at 9.45pm, Nov 14)
Sep 18, 2020Macau gaming could recover more quickly than casino play in Las Vegas, Nevada, in the United States, although the mechanics of Macau’s comeback were “opaque” in terms of mainland...
”Many investors cite Golden Week as a catalyst to significant, sustainable visitation increases and a showcase for profitability for many casinos [in Macau]... However… we are concerned recovery estimates may again be pushed back”
Analyst at Roth Capital Partners