It’s 10 times reported revenues; Macau disputes US report
By GRACE LEONG 06 July 2011
The amount of unreported illegal side-betting, a problem typically associated with junket operators in Macau, could be as much as 10 times that of reported revenues, according to the US Department of State.
Macau’s gross gaming revenues were reported to be around US$23.5 billion in 2010. But industry observers cited by the US State Department’s Bureau for International Narcotics and Law Enforcement Affairs claim that the amount of illegal side-betting, or clandestine parallel betting that’s linked to the outcomes of lawful wagers, could be as much as 10 times that of reported revenues - potentially a staggering US$235 billion.
Manuel Joaquim das Neves, head of the Macau Gaming Inspection and Coordination Bureau (DICJ), disputed the US authorities’ claims as ‘unbelievable’.
While admitting that side-betting is a problem in Macau, Mr. Neves downplayed the issue, saying it isn’t as serious as portrayed.
‘There’s a lot of risk for people involved in side-betting - the player and the junket operator. There’s no contract signed. It’s based on confidence. If any party doesn’t pay, those involved have no mechanism to recover the debt,’ Mr. Neves said. ‘Since the risk is so high, the amount of bets can’t be very big.’
Side-betting occurs when junket operators, who supply VIP high rollers to Macau casinos, also wager with their clients.
It is a problem for casino operators and gaming regulators in Macau because it cuts out the casino’s take as well as a 40 per cent gaming tax for the government.
Mr. Neves said it would be very difficult to know the extent of side-betting in Macau casinos.
He also could not provide estimates on the amount of gaming tax revenues the Macau government has lost to illegal side-betting.
The 2011 International Narcotics Control Strategy Report, which described the Chinese enclave as a ‘major money laundering territory’, has called for the Macau government to ‘strengthen inter-agency coordination to prevent money laundering in the gaming industry, especially by introducing robust oversight of junket operators’.
Loosely regulated gaming promoters or junket operators remain a key challenge, according to the US State Department report which was updated in May.
Junket operators profit from sourcing the majority of Macau’s VIP players who contribute to over 80 per cent of gaming revenues.
They finance gamblers in Macau, assuming credit risk and mingling customer funds in a consolidated junket account, and supply them to the casinos on commission.
Junkets are increasingly popular among gamblers who seek anonymity and among casinos aiming to reduce credit default risk, the report said.
‘This inherent conflict of interest, together with anonymity provided through use of the junket operator to transfer funds, presents significant challenges to anti-money laundering measures in the gaming sector,’ the report said.
As the world’s biggest gambling market by revenue, benefiting from millions of visitors - mostly from nearby mainland China - Macau is vulnerable to becoming a hub for the laundering of criminal proceeds, the report said.
In addition to the existence of casinos, close proximity with China and Macau’s open economy are factors that create a risk of money-laundering and terrorist-financing activities, the report said.
While Macau continues to make ‘considerable efforts’ to establish an anti-money laundering framework that meets international standards, the report highlights existing problems including a lack of mandatory cross-border currency reporting requirements, as well as a ‘lack of controls on cross-border physical movement of cash’.
The primary sources of criminal proceeds in Macau are drug-related crimes, organised crime and illegal gambling. Networks spanning across Macau’s boundary with mainland China account for much of the criminal activity, the report said.
‘We don’t deny that side-betting exists, but we’re policing inside the casinos to control the problem,’ Mr. Neves said.
‘Our DICJ bureau is not the police department. The DICJ has no policing powers, but we have the Judiciary Police inside the casinos, which takes care of illegal transactions, money laundering,’ he said.
But ultimately, side-betting is ‘difficult to find or prove, if nobody tells’, he said.
2 comments:
Macau’s side-betting may be worth US$235b
It’s 10 times reported revenues; Macau disputes US report
By GRACE LEONG
06 July 2011
The amount of unreported illegal side-betting, a problem typically associated with junket operators in Macau, could be as much as 10 times that of reported revenues, according to the US Department of State.
Macau’s gross gaming revenues were reported to be around US$23.5 billion in 2010. But industry observers cited by the US State Department’s Bureau for International Narcotics and Law Enforcement Affairs claim that the amount of illegal side-betting, or clandestine parallel betting that’s linked to the outcomes of lawful wagers, could be as much as 10 times that of reported revenues - potentially a staggering US$235 billion.
Manuel Joaquim das Neves, head of the Macau Gaming Inspection and Coordination Bureau (DICJ), disputed the US authorities’ claims as ‘unbelievable’.
While admitting that side-betting is a problem in Macau, Mr. Neves downplayed the issue, saying it isn’t as serious as portrayed.
‘There’s a lot of risk for people involved in side-betting - the player and the junket operator. There’s no contract signed. It’s based on confidence. If any party doesn’t pay, those involved have no mechanism to recover the debt,’ Mr. Neves said. ‘Since the risk is so high, the amount of bets can’t be very big.’
Side-betting occurs when junket operators, who supply VIP high rollers to Macau casinos, also wager with their clients.
It is a problem for casino operators and gaming regulators in Macau because it cuts out the casino’s take as well as a 40 per cent gaming tax for the government.
Mr. Neves said it would be very difficult to know the extent of side-betting in Macau casinos.
He also could not provide estimates on the amount of gaming tax revenues the Macau government has lost to illegal side-betting.
The 2011 International Narcotics Control Strategy Report, which described the Chinese enclave as a ‘major money laundering territory’, has called for the Macau government to ‘strengthen inter-agency coordination to prevent money laundering in the gaming industry, especially by introducing robust oversight of junket operators’.
Loosely regulated gaming promoters or junket operators remain a key challenge, according to the US State Department report which was updated in May.
Junket operators profit from sourcing the majority of Macau’s VIP players who contribute to over 80 per cent of gaming revenues.
They finance gamblers in Macau, assuming credit risk and mingling customer funds in a consolidated junket account, and supply them to the casinos on commission.
Junkets are increasingly popular among gamblers who seek anonymity and among casinos aiming to reduce credit default risk, the report said.
‘This inherent conflict of interest, together with anonymity provided through use of the junket operator to transfer funds, presents significant challenges to anti-money laundering measures in the gaming sector,’ the report said.
As the world’s biggest gambling market by revenue, benefiting from millions of visitors - mostly from nearby mainland China - Macau is vulnerable to becoming a hub for the laundering of criminal proceeds, the report said.
In addition to the existence of casinos, close proximity with China and Macau’s open economy are factors that create a risk of money-laundering and terrorist-financing activities, the report said.
While Macau continues to make ‘considerable efforts’ to establish an anti-money laundering framework that meets international standards, the report highlights existing problems including a lack of mandatory cross-border currency reporting requirements, as well as a ‘lack of controls on cross-border physical movement of cash’.
The primary sources of criminal proceeds in Macau are drug-related crimes, organised crime and illegal gambling. Networks spanning across Macau’s boundary with mainland China account for much of the criminal activity, the report said.
‘We don’t deny that side-betting exists, but we’re policing inside the casinos to control the problem,’ Mr. Neves said.
‘Our DICJ bureau is not the police department. The DICJ has no policing powers, but we have the Judiciary Police inside the casinos, which takes care of illegal transactions, money laundering,’ he said.
But ultimately, side-betting is ‘difficult to find or prove, if nobody tells’, he said.
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