Casino Junkets May Not Survive Introduction of Digital Yuan
Macau has announced plans to make use of China’s future digital currency. The plan will help Beijing reduce money laundering at the gambling hub, but it could prove to be the end of casino junket operators.
The junkets, which help to bring high rollers to Macau, have been struggling since last June when Beijing labelled the cross-border flow of money for gambling as a national security risk. As a result of this, financing channels used by the online gambling sector and the junket industry have been closed and tens of thousands of people have been arrested for illegal cross-border gambling.
This has led to a number of long-term customers hurrying to withdraw their money from junkets, causing liquidity problems. According to industry executives, the introduction of a digital yuan could close the remaining avenues available to junket operators.
However, casino executives are hoping that a traceable digital yuan will result in Beijing allowing more visitors to travel to Macau for gambling. Senior casino executives believe that the use of the e-CNY will allow Beijing more control over money laundering and illegal transactions.
There are fears that Beijing could impose a daily or annual transaction limit, but the impact of this may be mitigated if more tourists are allowed to visit. Each year, visitors from mainland China account for more than 70% of Macau’s tourists.
Casino revenues in Macau, the only place where gambling is legal in China, have been falling due to coronavirus restrictions. At present, they are down around 60% from 2019.
However, the chairman of Las Vegas Sands and Macau’s Sands China, Robert Goldstein, welcomed the introduction of the e-CNY. In a recent analyst call he said, “It may be a very positive thing for the Macau market as it becomes...more integrated into China and more consumer-friendly”.
China has been testing the digital currency in areas such as Suzhou, Shenzhen, Chengdu and Xiong'an. Ho lat Seng, Macau’s chief executive, has said that he believes the area should “follow the pace” of the mainland.
Oriol Caudevilla, a fintech consultant based in Hong Kong said, “The digital yuan is important for casinos to control the money flows but it's part of a bigger strategy which involves Macau becoming diversified”.