Inside Asian Gaming

INSIDE ASIAN GAMING | December 2011 38 Feature published in March of this year on criminal influence in the industry, DICJ chief Manuel Joaquim das Neves remarked, “I cannot say that in Macau we don’t have triads, but things are under control.” But if the history of organised crime proves anything, it’s that when criminals or those skating on the edge of legality have a chance to go legitimate—or at least cover their activities in a cloak of legitimacy—they will take it. It’s a lot less risky and generally more profitable. That may have happened in the case of the triads’ alleged historical role as issuers of Macau casino credit and collectors of player debts. According to Macau industry sources, junket-related businesses have in the last few years been setting up as licensed moneylenders inside the People’s Republic of China, using player assets as collateral for personal loans which can be drawn over the border inMacau and then used for high roller play in the casinos. This system has multiple advantages. One is that it gets around the effects of macroeconomic policies imposed by Beijing on mainstream Chinese banks— policies that aredesigned to cool commercial lending and subsequent asset speculation. As money lenders or credit brokers, the junket-related businesses are operating half in the mainstream economy (in terms of the debts being formally recognised by the Chinese courts) and half in the informal banking sector (in that the mainstream bank rules on allowed levels of leveraging and personal collateral required need not be applied). It looks like a typically pragmatic Chinese approach to a set of commercial and ethical issues (what the Chinese sometimes refer to as ‘one eye open, one eye closed’). But even if the process of moneylending for Macau casino gambling has gone respectable, it’s still a delicate political issue. Direct casino taxes supply more than 80% of public revenue in Macau, and the junket operators and promoters are the engine, supplying the credit without which the industry couldn’t exist at the scale it does today. Indirectly, they are the government’s principal source of money. In a confidential State Department cable published by WikiLeaks earlier this year, Steve Jacobs, former CEO of Sands China, described their political influence as “significant”. The taint has followed them to Singapore. The government there has expressed concern about an historical linkage between external junkets in Asian casinos and criminal influence. The Casino Regulatory Authority (CRA) appears, therefore, to start from the position that no individual or entity is entitled toa casino junket licenceunless they can prove otherwise. The CRA has devised a stringent system of licensing and monitoring for them. It requires a level of disclosure from applicants and the casinos regarding their activities and business arrangements that effectively does away with the anonymity junkets and their players enjoy in Macau. How this will work in practice remains to be seen. No licences have been issued to date, although it’s been reported that at least three operators have applied. X. More Licences? The concessions the Singapore government granted to Genting and Las Vegas Sands in 2006 run for 30 years with a 10-year guarantee of exclusivity that expires in2019. Ayear and a half into the experiment, the two resorts, representing a combined capital investment of about S$14.6 billion (US$11.3 billion), appear to be driving No evil here—it’s in nearly everybody’s interests to paint a rosy picture of Macau Goodbye to all that?—Using an SJM licence to launch a third party casino may be barred in future