The act of a patron leaving their deposits with a Macau casino, via the respective VIP host or a junket, should still be legitimate as long as the deposit funds involved are used only for gambling, according to both the current rules and the government-drafted new rule against the so-called illicit deposit taking activities, say lawyers and a scholar spoken to by GGRAsia.
“Casino gaming is a cash-based business, after all. I believe that bona fide patrons would still be able to place their chips and cash for gaming purposes in their non-interest-bearing membership accounts, adhering to the regulatory and record-keeping requirements,” Macao Polytechnic Institute gaming scholar Ryan Ho Hong Wai remarked to GGRAsia.
Local gaming lawyer Bruno Ascenção shared a similar observation: “The deposit of such funds must solely be used for selling casino gaming chips that the promoter [junket] obtains from the casino operator on credit. Any deposit outside of this scope is illegal.”
The Macau government has proposed to include in the city’s gaming law penalties against illegal deposit taking from the general public either by casino concessionaires, their shareholders, or employees, for some form of return. It suggests offenders could face a sentence of up to five years in prison, or a fine.
Macao Polytechnic Institute’s Mr Ho told GGRAsia: “From the text of the consultation paper, it [the government] seeks to regulate the illegal activity of interest-bearing cash deposits inside the VIP room operations.”
The idea to criminalise cash deposits lodged for some form of return was in a consultation document issued by the Macau government on Tuesday, about proposed changes to the city’s legal framework for gaming.
The criminal penalty idea – along with others – is subject to a 45-day public consultation that started on September 15.
The objective of the proposed new rule against illegal deposit-taking activities is to deter the usage of casino deposits as “financial investments”, remarked Macau law firm MdME’s managing partner Rui Pinto Proença to GGRAsia.
“The objective, which to me is legitimate in the light of past events, is to deter and punish the usage of casino deposits as financial investments. As much as this may impact the ability of gaming promoters to finance their activities, the protection of the general public and of the financial stability of the gaming concessionaires is clearly the policy priority,” Mr Proença remarked.
He added: “However, it is important to note that the consultation document does not yet reflect the specific wording of the amendments to the gaming law and thus the exact extension of the behaviours being criminalised needs to be further assessed when the draft bill is released.”
It has been common practice that VIP players – typically from mainland China – deposit part of their winnings with a junket operator or a direct VIP host at Macau casinos. Those funds are then gambling capital for their subsequent Macau trips, junket industry sources told GGRAsia.
But in recent years, Macau recorded several high-profile cases of alleged theft in casinos of large amounts of deposit cash lodged by private investors. Such incidents reportedly often involved people associated with VIP junkets.
Until recently, it was also common, say industry sources, for junkets in Macau to raise capital to finance their rolling chip programmes by offering private investors above-market interest rates – relative to the regulated financial sectors – for their deposits.
The experts spoken to by GGRAsia broadly agreed that the Macau government’s purpose in proposing to create criminal penalties for the practice of cash deposits being lodged at the city’s casinos for some form of return, is to ensure stronger oversight of what had been a problematic area of the industry, and had already been deemed as not authorised under law.
The criminal penalties proposed – even if they passe into law – might not affect significantly the course of larger-scale VIP operations at the city’s casinos, suggested the lawyers and scholar consulted by GGRAsia.
Such a step would however be likely to depress the small- and mid-sized junket operators that rely on interest-bearing deposit taking from patrons to fund their operation, said gaming scholar Mr Ho.
Both Macao Polytechnic Institute’s Mr Ho and local gaming lawyer Sérgio de Almeida Correia believed that the government has taken the “right direction” with the proposed new rule against illegal deposit-taking activities.
“This particular industry practice used to be a critical financing source for junkets, and small and mid-sized VIP rooms will have a tough time financing their VIP room operations,” Mr Ho told GGRAsia.
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