LVS says it dumped Macau junkets in December 2021

0

Posted on: Feb 7, 2022 10:52 am.

Last updated on: February 7, 2022, 10:52 am.

LVS Corp severed ties with its three main Macau junket operators in December 2021, according to a statement in its annual report filed on Friday.

Avalanche Junkets
Levo Chan, head of Tak Chun Junket, was arrested by Macau authorities on January 30, 2022. (Image: MNA)

The company said there could be “no assurances that we will be able to maintain or expand our relationships with game promoters [junkets].”

In addition, there is no guarantee that junkets will continue to be licensed in Macau in the future, which could have a negative impact on his business. LVS operates casinos in Macau through its subsidiary Sands China.

The move shows operators are embracing the new reality in Macau. Beijing is no longer in the mood to tolerate the junket model that once generated the lion’s share of casino revenue in the world’s largest gaming hub. This model helped LVS grow into the wealthiest casino operator in the world.

Major Arrests

For years, the junkets have been feeding Macau’s casinos a steady stream of high rollers, offering them loans to bypass controls on mainland China money movements.

But Beijing is waging war on cross-border gambling and those who enable it. The Chinese government is seeking tighter controls on private capital to maintain exchange rate stability.

China’s Ministry of Public Security said about 1 trillion RMB (145.5 billion U.S. dollars) flows into gambling activities from the mainland every year. This is a “threat to the economy and national security of the country,” it said.

In November, the Wenzhou City Procuratorate issued an arrest warrant for Suncity CEO Alvin Chau, the world’s largest junket operator. He was arrested in Macau just a few days later.

Prosecutors at the gambling hub have charged Chau with running a criminal syndicate, offering illegal online proxy betting from the Philippines and engaging in money laundering.

Then, in late January, Macau police arrested Levo Chan, the boss of the second largest junket operator, Tak Chun. He is accused of illegal gambling, money laundering and leading a triad gang.

Sudden death

The importance of junkets to Macau’s casino industry has been in decline since 2013, when Beijing began to pressure the VIP segment as part of a crackdown on “corruption”.

But the suddenness of her demise in recent months has been staggering. In addition to the arrests of the two most notable figures, a Macau Supreme Court ruling in November suggested the writing for the junkets was on the wall.

The court ruled that casino operators are jointly liable with junket operators for deposits made in the VIP rooms operated by the junkets. That meant the relationship would be relatively risk-free for the operators longer, LVS said in its filing.

While we strive for excellent systems and practices to monitor the activities of game operators operating at our casinos, we cannot assure you that we will be able to monitor all activities conducted by them,” LVS told its shareholders .

“If a gaming operator fails to meet our standards, we may suffer reputational damage, worsening relationships with, and potential sanctions from, gaming regulators that have our operations.”

“Furthermore, we cannot assure you to what extent the Macau courts will hold us liable for the activities of game operators at our casinos in the future, nor can we determine what the Macau courts would consider to be typical activities of game operators,” it added added.

Share.

About Author

Comments are closed.