Middle-class pick up the slack in Macau
Print Edition
The media scrum surrounding the chairman of a Chinese financial services company was interested in one particular unpaid loan.
The amount — US$1.3 million — was nothing extraordinary. But the story behind it was. Xie Xiaoqing, chairman of Rongzhong Group, was sued in January for failing to repay the money to Sands China Ltd, US billionaire Sheldon Adelson’s Macau gambling unit.
Xie has said he wasn’t gambling and the money was for a friend. A spokesman for his company said yesterday Xie was not available to comment.
For many years, tycoons and government officials were frequently spotted betting millions in the southern Chinese city’s lavish VIP rooms. But their numbers have dwindled because of an anti-corruption campaign led by China’s new leader Xi Jinping.
Just a few years ago, that might have devastated Macau, which typically generated 70 percent of its revenues from high rollers including government officials. In the third quarter those big whales accounted for just 65 percent, according to government data, the lowest share since 2006.
Yet annual revenues are on a pace to rise 16 percent to US$44 billion — seven times what Las Vegas took in last year — and October’s numbers smashed forecasts, jumping 32 percent to a record US$4.6 billion.
Middle-class mass-market gamblers have taken up the slack at just the right moment, and some of those government officials are still finding their way in, albeit more quietly.
“It is much stricter with the leadership change,” said Li, a Macau junket operator who helps organize high rollers’ travel and hotel arrangements and asked to be identified only by his surname. “They (officials) keep a low profile and stay in service apartments arranged by other people,” instead of opulent casino suites, complete with massage rooms and karaoke parlours, that they once preferred.
New regulations put in place over the past year in Macau require junkets and casinos to report suspicious transactions and player lists each month, including details of when they played and how much they won or lost. Macau is set to implement a new money laundering law next year which may allow authorities to freeze and seize assets.
Government officials would visit Macau for leisure or personal business, using fake passports or special permits which gave them easy access, according to junket and casino executives.
Since the corruption crackdown, officials have been finding some creative ways to avoid detection. Macau casinos have some of the most sophisticated surveillance technology yet spotting officials gambling on the property can still be difficult, said a senior executive at one of Macau’s newly opened resorts.
“There are some low-ranking officials from state-owned enterprises who still come but if they have fake identification it is very difficult for us to spot,” an executive at a casino said.
In one example, casino workers caught an official whose passport had two different birth dates.
Some officials are getting their gambling fix without setting foot in Macau, placing bets by calling someone sitting at a baccarat table and giving verbal instructions, said a junket operator who gave his English name as Mark.
The VIP segment isn’t going away. Macau’s 35 casinos still rake in big bucks from these gamblers who drop 1 million yuan (US$164,100) on a typical visit. But the high rollers are now more likely to be wealthy private businessmen rather than government officials and politically connected tycoons.
Zhonglu Zeng, a professor at Macau’s Polytechnic University who co-authored a study on high rollers from the mainland, said although the total number of high rollers are now bigger than before, the proportion is now heavily skewed to private business owners than officials.
Government officials now comprise perhaps 3 percent of VIP room visitors, down from about 30 percent three years ago.
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