Xi's pervasive anti-graft campaign contributed to a disastrous
year for major casino companies, which have lost a combined $58
billion in market value over the past six months as VIPs stayed
The former Portuguese colony became a paradise for Chinese
government officials and rich businessmen to flaunt their wealth and
indulge themselves with private jets and sumptuous hotel suites.
Gambling revenue hit $45 billion last year, seven times Las Vegas's
But it also became a pathway for extracting money from China -
something the government is targeting aggressively.
China extended a crackdown on illicit money transfers into Macau,
giving its Economic Crimes Investigation Bureau access to
transactions made through the state-backed UnionPay credit card, the
South China Morning Post reported on Wednesday.
The move, timed just ahead of Xi's high-profile visit, is the latest
in a string of actions aimed at curbing illicit funds leaving the
country, a priority for Xi as he goes after corrupt officials who
have fled overseas.
UnionPay has been a conduit for growing numbers of Chinese to
illegally send billions of dollars abroad, a Reuters special report
showed in March.
The corruption link helps explain Beijing's interest in seeing Macau
expand beyond casinos into more family-friendly entertainment.
Li Gang, China's representative in Macau, warned on Sunday that "the
dominance of one industry can lead the city to prosperity, but it
also can lead to its demise".
Gambling merited barely a mention in an editorial this week in the
Communist Party's official newspaper, the People's Daily, praising
Macau as a platform for international trade and a world heritage
Junket operators who lend money to wealthy mainland Chinese gamblers
said they would keep a low profile during Xi's visit, which marks
the 15th anniversary of Macau's handover from Portugal. He is
expected to voice his support for Macau diversifying beyond
"Xi's visit definitely means more control on the gaming path,
especially for VIPs," said one junket operator who declined to be
named, referring to the high-rollers who accounted for two-thirds of
Macau's revenue last year but now represent just 56 percent.
Hong Kong-listed casino stocks have plunged 32-51 percent since the
start of the year, widely underperforming the benchmark Hang Seng
Index, which has dropped 2 percent in the same period.
[to top of second column]
NEW CASINOS, NEW RESTRICTIONS
Macau and China signed a service trade agreement between the enclave
and the southern province of Guangdong on Thursday, China's commerce
ministry said on its website.
The agreement is aimed at liberalizing trade in services and "will
be beneficial to the diversified development of Macau's economy",
the ministry said.
China is pushing for new development focusing on culture, sports and
retail, instead of prioritizing gambling.
If casino companies do not comply, it may affect their licenses.
Discussions on license renewals start next year, and the earliest
concessions expire in 2020. The government has said it is looking at
how effectively operators provide non-gaming amenities in their new
Casino moguls including U.S. billionaires Sheldon Adelson and Steve
Wynn are also under pressure to add non-gaming elements to secure
coveted gambling tables.
Adelson, who has led diversification efforts in Macau with an
exhibition arena and hotels, is building a mock Eiffel tower, while
Wynn is building a palatial $4 billion resort with a big lake and
Some junket operators said they welcomed Xi adding his voice to the
calls for diversification because gambling accounts for the bulk of
Macau's tax base and left the city vulnerable to sharp downturns.
"I think Xi's trip is a good thing for Macau, for the central
government to show support and ensure stability," said a junket
operator. "There is a lot of negative influence right now."
(Additional reporting by Sui-Lee Wee; Editing by Emily Kaiser and
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.