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Beijing cracks down at home to slow visits to overseas casinosNiall Fraser and Bloomberg08 February 2015Crackdown on junket organisers in China is aimed at slowing trips by VIP players to Asian casinos beyond already embattled MacauChina is to stem the flow of people gambling overseas and online by launching a crackdown on domestic casino-linked business that were set up to attract big-spending clients.The crackdown - led by the country’s powerful Ministry of Public Security - is being seen as a significant extension of the unprecedented campaign to clean up Macau’s casinos launched by Beijing late last year. That campaign has already seen a number of major junket operators - the shady firms that bring high rollers to the tables - shrink or close their operations in the former Portuguese enclave.Chinese authorities will first focus on casino operators in neighbouring countries that have set up offices “to attract and recruit Chinese citizens” to gamble abroad, said Hua Jingfeng, a deputy director at the Ministry of Public Security.“Some foreign countries have taken China as a big market. We’ve seen a series of cases that involved gambling abroad. There are casinos in quite a number of our neighbouring countries. The casinos have set up offices in China to look for customers, which is another target of our crackdown,” Hua said.A casino insider in Macau said last night that the new move would inflame jitters among junket operators, as it looked like Beijing was attempting to close off the places that were looking to take up the slack left by the Macau clean-up campaign.“The next two or three months are going to be crucial for both the Chinese authorities and their bid to clean things up, but also the junkets and casino companies. The post-Lunar New Year period is going to be very interesting,” the insider said.Last Friday, Galaxy Entertainment Group shares led gains among Macau casinos after news of the crackdown, jumping 7.1 per cent by the close of trading in Hong Kong for their biggest rise since April 2014.While shares reacted positively on the anticipation players would return to Macau from overseas casinos, the overall tone was still negative, Credit Suisse Group AG analysts said.While marketing of gambling is generally not allowed in China - where gambling is banned - “re-iteration of this anti-gambling by the official means we see little room near term for China to relax visa trends to Macau soon,” wrote Credit Suisse analysts.President Xi Jinping’s two-year battle against corruption and Macau’s stricter travel rules have deterred high-stakes gamblers from entering Macau, the world’s biggest gambling hub, which relies on so-called VIPs for a majority of revenue.As a result, significant numbers of gamblers from China have opted for casinos in countries including the Philippines, South Korea, Vietnam, Cambodia, Australia and Singapore.Hua did not specify the countries that would be targeted.At the end of last week, Wynn Macau closed 3.5 per cent higher, Sands China and Melco Crown Entertainment both gained 3.1 per cent, MGM China Holdings climbed 2.6 per cent, while SJM Holdings increased 1.4 per cent.Hong Kong’s Hang Seng index closed 0.4 per cent down.Echo Entertainment Group, operator of Sydney’s only casino, was taking more bets by Chinese VIPs, CEO Matt Bekier said this week.Macau junket operator David Group, which has closed a number of its VIP rooms in the city amid the industry downturn, has said it was taking more wealthy customers beyond Macau to Asian centres with more relaxed visa approval policies, such as Manila, Vietnam and South Korea.Macau’s government is also stepping up regulations on the gambling industry, including tightening scrutiny on junket operators and on the use of China UnionPay debit cards at casinos to obtain cash for gambling.
A hotel executive who is a nephew of casino tycoon and SJM Holdings founder Stanley Ho Hung-sun was arrested last month in the largest bust of a prostitution ring in the city’s history, in a sign that Xi’s crackdown was expanding to include long-tolerated vices.
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