China’s Crackdown on Junkets is Hurting Macau Casinos

Macau casinos are dependent on big-betting public officials supplied by junket operators, an arrangement that is currently at risk due to an anti-corruption campaign.

Chinese gambling laws prohibit casinos from operating, so most of the country’s wealthy take their business to Macau. The city has become the world’s number one casino destination over the past decade in large due to the work of junkets, companies which bring together wealthy businessmen and public officials from the mainland and deliver them to the doors of luxury resort casinos.

But now that the Chinese authorities under President Xi Jingping are cracking down on official corruption, junkets are coming under intense scrutiny. In the eyes of the authorities, too many public officials are using Macau casinos are a way of laundering money received from bribe-taking.

One veteran junket operator had this to say: “I’m not optimistic for the future of the VIP junket industry here… Beijing isn’t directly controlling but is putting subtle pressure on the authorities here. There’s more information gathering and it’s harder now for even low-level officials to come here to gamble.”

Casinos are feeling the squeeze

Over the past decade gambling news out of Macau have been nothing but reports of booming casinos and skyrocketing profits, but 2014 could see the slowest yearly growth since the city opened up to foreign investors in 2003.

Without wealthy public officials coming through their doors each day casino operators will have a hard time justifying billion-dollar investments like the Venetian Macau, City of Dreams and the Grand Lisboa.