The stock market in Macau took a hit after reports emerged that the Special Administrative Region (SAR) of China plans to criminalize illegal money-exchange activities. Macau casino operators saw their shares plummet as news of this crackdown spread. According to Bloomberg Intelligence, Macau casino stocks dropped by as much as 3.4% on Monday following the announcement.
The Macau government is looking to add a provision to a gaming crimes bill that would make it illegal to provide unauthorized money exchange or loan services to gamblers. Those found in violation could face up to five years in prison. This move is seen as part of Beijing’s efforts to clamp down on capital outflow through gambling in Macau.
The crackdown on informal money exchange and lending markets in Macau is not new. The Chinese Ministry of Public Security has been actively targeting illegal gambling activities in the region. In 2020 alone, over 75,000 people were arrested, and 2,260 illegal online gambling platforms were shut down. The arrest of Macau gambling kingpin Alvin Chau in 2021 further signaled China’s determination to tackle money laundering and illicit gambling practices.
Junket operators like Chau’s Suncity Group, which provided credit for VIP gamblers, have been particularly targeted. The Macau government has passed laws prohibiting agents from lending money or sharing revenue with casino operators, effectively dismantling the VIP industry that once dominated Macau’s gaming revenue.
Despite these crackdowns, there is still a significant demand for money exchange services in Macau. Reports indicate that over 10,000 people offering such services were detained in 2023. This suggests that there is a market for these services, despite the risks involved.
Analysts from Citigroup, including George Choi, have expressed concerns about the impact of these developments on the Macau gaming sector. They warn that the negative news could add uncertainties and further damage investor sentiment in an already fragile market. However, they believe that VIP gamblers are unlikely to rely on small money exchange operators as their primary source of funds.
China’s crackdown on black market money exchange and cross-border gambling is part of a broader effort to prevent capital flight amid economic uncertainties. The country is taking steps to tighten regulations and curb illicit financial activities in order to stabilize its economy.
Overall, the news of Macau’s plans to criminalize illegal money-exchange activities has sent shockwaves through the gaming industry in the region. Casino operators are bracing for the impact of these new regulations and the potential consequences for their businesses. It remains to be seen how these measures will affect the gaming sector in Macau and whether they will succeed in deterring illegal financial activities in the region.