China promises to "crack down on" Foreign Casino Offices

Towards the end of 2014, China renewed their efforts to prevent money laundering and political corruption in Macau, which took its tool on the world’s top casino destination. And now, a senior Chinese government official has announced plans to continue this policy in a manner that could affect other gaming destinations in surrounding countries.

Hua Jingfeng, a deputy bureau chief at the Ministry of Public Security, believes that illegal gambling remains a big problem, despite his government’s best efforts to “forcefully keeping it in check.”

“Some foreign countries see our nation as an enormous market, and we have investigated a series of cases,” Hua told reporters. “A fair number of neighbouring countries have casinos, and they have set up offices in China to attract and drum up interest from Chinese citizens to go abroad and gamble. This will also be an area that we will crack down on.”

Because gambling is illegal on the mainland of China, aside from state lotteries, foreign casino companies use the offices (a.k.a. junkets) that Hua mentioned to attract gamblers to Macau, Australia, the Philippines, Singapore and South Korea. And this directly benefits Galaxy Entertaiment, Melco Crown, MGM Resorts, Paradise Co, Las Vegas Sands, Wynn Resorts and SJM Holdings. But assuming the Chinese government does go after the offices that recruit gamblers, a major blow would be dealt to all of these companies.

Revenue has already been falling in Macau, thanks to the aforementioned campaign by Chinese President Xi Jinping to rid China’s special istrative area of money laundering and political corruption. And many high rollers that have helped Macau casinos become the world’s biggest gaming destination are now staying away from Macau. Assuming the junkets in mainland China that recruit these high rollers start getting shut down, then it’s very likely that even fewer high rollers will visit the area.

China is perfectly within their right to go after the junkets, though, because gambling advertising is illegal on the mainland. In the past, junkets have gotten around this law by promoting the resorts, rather than the attached casinos. But Hua’s comments indicate a desire to go after these foreign casino-promotion offices, perhaps on grounds that they are going beyond just promoting the resort side of these casino destinations.