Punters rush to cashout Macau funds as gambling crackdown looms
China’s broadening crackdown on offshore gambling has scared high rollers in Macau, who have rushed to withdraw billions of dollars from the world’s biggest casino hub.
The Straits Times is reporting an unprecedented stampede to withdraw money from junkets, companies who lure high rollers to gamble.
This started in July after Beijing identified the cross-border flow of funds for gambling as a national security risk.
The customer withdrawals have spilled into the broader casino industry, leading to a cash crunch in Macau’s VIP sector at a time the Chinese territory is struggling to recover from COVID-19 restrictions, which sent tourist numbers and gambling revenues plummeting.
“This is not millions we are talking about being taken out here, but billions,” said a casino executive who was not authorised to speak to the media.
“We have cash in the bank but with everyone withdrawing, it’s a problem.”
Several other executives told Reuters that cash was being taken out in the billions of Hong Kong dollars.
While Macau casinos have ample reserves to ride out several months of zero revenues, the rising cash withdrawals point to a major loss of confidence in the crucial VIP junket sector, a further blow to the economy, analysts add.
The sector accounts for around 50 per cent of overall gambling revenues, which hit US$36.5 billion last year.
The pandemic has already ravaged the economy with gambling revenues down about 96 per cent in the second quarter, year-on-year.
The withdrawals began when hundreds of customers tried to pull deposits from top junket Suncity, at its VIP clubs across Macau, over fears it was being targeted by Chinese authorities.
Suncity denied the allegations.
The group then began restricting withdrawals, sparking a panic rush by customers seeking to pull their money from all junkets, executives said.
Suncity said it was acting in compliance with new casino policies, but declined to elaborate.
Junkets in the former Portuguese colony are licenced to provide customers with chip deposits and withdrawal services on behalf of casinos Sands China, Wynn Macau, MGM China, Galaxy Entertainment, SJM Holdings and Melco Resorts.
All casinos declined requests for comment.
Cash withdrawals prompt casinos to implement limits
As customers started pulling out money amid fears of a broader crackdown by Beijing, junket agents in turn have begun taking back deposits from the casinos.
Casinos have reacted by putting limits on the amount of cash chips that can be withdrawn, executives said.
“The crackdown on the cross border transactions have finally rammed home the inconvenient fact that Macau has always been dependent on outflow of funds from the mainland,” founder of Macau gaming consultancy IGamiX Ben Lee said.
Gambling is illegal on the mainland, but is allowed in casinos in Macau.
In some casinos, customers can now only withdraw US$128,000, compared with five times that in recent months and only the account holder can withdraw, executives said.
Any transactions about $US$25,600 are flagged, leading to people carrying around millions in chips in multiple sets to avoid detection.
With thousands cashing out chips, some chip machines and exchange desks around Macau have briefly showed limited or no availability in recent weeks.
Macau’s monetary authority told Reuters the supply of Hong Kong dollars is “currently” stable and that it has taken measures to ensure the adequate supply of currency.
The withdrawals come as China fully resumes Macau tourist visas from September 23, and executives warn that more arrivals could mean more cash being pulled out.
Some Suncity customers, angry at not being able to get their funds, have started an online group called ‘Suncity victims’ and are planning a protest on September 23 at the VIP rooms across Macau.