Macau’s casino king is dethroned as Beijing reigns over gambling at sea
HONG KONG — For nearly two decades before being arrested by police last month, Alvin Chau transported big Chinese players to casinos in Macau, bringing tens of billions of dollars to the city as it overtook Las Vegas to become the richest gambling hub in the world.
His meteoric rise from construction worker to Macau’s largest source of money mirrored that of his hometown, where glitzy beach resorts sprang up after China took over sovereignty from the former Portuguese colony in 1999 and opened the casinos to foreign investment.
Mr Chau, 47, controls Sun City Gaming Promotion Co., a junket operator who said they have VIP rooms at major city casinos, including those operated by US-based MGM Resorts International.,
Wynn Resorts Ltd.
and the sands of Las Vegas Corp.
Mr. Chau’s way of life symbolized the good times of the city: he sponsored motor races, produced films and posed with celebrities in the pages of society.
His luck changed last month when Macau police arrested him, after a two-year investigation they said exposed an illegal gambling syndicate and money laundering. The arrest came days after mainland Chinese authorities separately issued an arrest warrant for Mr. Chau, accusing him of carrying out illicit online and cross-border gambling operations involving more than 80 000 players from mainland China.
Mr. Chau could not be reached, and his attorney’s office did not respond to requests for comment. Calls to Sun City Gaming were not answered.
The move against one of Macau’s most powerful rainmakers has sent the industry shuddering, lowering shares of casinos on the Hong Kong Stock Exchange and fueling fears that Macau’s heyday is coming to an end. The Junkets have traditionally made up the bulk of the city’s VIP gaming revenue. In mid-September, the city government frightened investors when it proposed to revise local gambling laws to strengthen regulatory oversight of the casino industry.
The Chinese central government has repeatedly warned that capital outflows from China pose a risk to national security, increasing pressure on the gambling hub which has suffered periodic cuts in money from Beijing under President Xi Jinping, who fought battles against corruption and opulence. Analysts say the junket industry has helped clients bypass strict capital controls in China, including funneling funds through unlicensed shadow banking and using cryptocurrencies.
“China has long turned a blind eye to what mainland visitors do when they come to Macau,” said Ben Lee, a Macau-based gambling consultant. “No more.”
One of the key questions is whether Mr Chau’s arrest was an isolated incident or part of a larger crackdown on the junket system, JP Morgan research analysts wrote on December 1.
After his arrest, Mr. Chau resigned as chairman of Hong Kong-listed Suncity Group Holdings Ltd.
, of which he is the majority shareholder, according to company documents. Suncity Group 1383 4.10%
did not respond to requests for comment. But in a statement to the stock market after her arrest, she distanced herself from Mr Chau, saying all VIP activity in Macau was carried out by Sun City Gaming Promotion, which the group said was a separate, 100% -owned entity. by M. Chau.
the value of the shares has halved since Mr. Chau was detained. The group’s website was not accessible, emails seeking comment were not received, and calls to its various offices went unanswered.
Macau casino operators have shut down VIP rooms in Sun City, the city’s gaming regulator said earlier this month.
MGM and Wynn did not respond to requests for comment. A spokesperson for Sands declined to comment.
Casino games are banned on the mainland, but Chinese tourists are by far the biggest spenders in Macau. The high stakes bet by the big players have helped make Macau one of the richest places in the world in terms of gross domestic product per capita, relying mainly on gambling revenues that have surpassed the Las Vegas Strip. in 2006.
Since 2020, Beijing has stepped up its campaign against cross-border gambling, issuing several government and legal notices and updating its laws to explicitly make it a crime to organize mainland Chinese citizens to gamble overseas. Earlier this month, state media reported that Beijing’s top envoy to Macau would be appointed as the local government’s national security adviser.
At that time, an arrest warrant for Mr. Chau was issued by police in east China’s Wenzhou City, alleging that he was running an illicit gambling ring involving 199 shareholders and more than 12,000 agents. An official from the Chinese attorney general’s office said shortly after that some overseas casinos and online platforms targeted customers from the mainland, a widespread but illegal practice.
Macau police who arrested Mr. Chau along with 10 other people said his case would be handled under Macao’s laws, which are separate from those in mainland China. They said their investigation was separate from the Wenzhou investigation.
The case sparked further scrutiny of Macau’s junket system, the networks of agents tasked with recruiting high-profile players, loaning them money and collecting their debts. The Junkets were first introduced to Macau decades ago by Stanley Ho, the late billionaire mogul who held a monopoly on gambling in the city until 2002.
The VIP deals that the junkets helped bring were the biggest source of government tax revenue in Macau until 2018, contributing more than 60% of the game’s total revenue, according to Morgan Stanley estimates. Suncity accounted for nearly half of Macau’s junket business before the Covid-19 pandemic.
In 2019, VIP activity fell to 38%, the investment bank said, before the pandemic sharply reduced overall activity in Macau.
“It’s probably reasonable to assume that VIP junket revenues would end up reaching near zero levels at the end of the day,” analysts at JP Morgan wrote, saying the Chinese government is signaling it will no longer tolerate junkets offering credits. or foreign currency transfers for mainland players.
A native of Macau and a Portuguese citizen, Mr. Chau was fortunate enough to work in the city’s VIP clubs around the turn of the century. In 2007, he managed a VIP room in a large hotel. In three years, he was ranked alongside Mr. Ho and Steve Wynn on a list of Macau’s most influential people compiled by the publication Inside Asian Gaming.
He has often appeared at public events dressed as an idol in the morning, pairing a costume with invisible socks. He’s once posed shirtless to show off a tattoo with the words “Suncity Group” on it.
It sets itself apart from the old school bosses by buying trendy nightclubs and restaurants and launching travel services for customers. Suncity sponsored the city’s largest annual sporting event, the Macau Grand Prix, with evenings overlooking the race through the narrow streets of central Macau. The company hired leading stars from the Hong Kong film scene, making a movie called “Poker King” which was shot in a casino with a VIP club run by Mr. Chau.
Mr. Chau wooed Beijing by supporting closer ties between mainland China and its partially self-governing cities, Macau and Hong Kong. He became a political adviser in the southern province of Guangdong in China and submitted proposals on tourism, trade and the film industry.
The boss of the junket, however, has built overseas casinos targeting Chinese gamblers – businesses that have been frowned upon by mainland officials, said Vitaly Umansky, senior analyst for global gambling at Sanford C. Bernstein. He seemed “to be trying to have his cake and eat it too,” Umansky said.
In 2019, Mr. Chau ran the Suncity Group gaming empire which had 4,500 employees and owned casinos in countries like Russia and Vietnam. A state newspaper alleged in July of the same year that Suncity Group’s operations in the Philippines and Cambodia allowed players to bypass Beijing rules and move billions of dollars out of China, naming Mr. Chau the Asian “king of casinos”.
Mr Chau has denied the charges but has publicly apologized for the reputational damage history has caused Macau and gambling operators. A year later, in July 2020, he posted a video that showed bank records from the company, claiming that the company did not have staff soliciting players in mainland China.
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