Macau casino shares tank on arrest
Print Edition
MACAU casino stocks tumbled yesterday, rattled by the arrests of 11 people over alleged links to cross-border gambling and money laundering, including the founder of the gaming hub’s biggest junket operator.
Shares in MGM China slid 11 percent, while Wynn Macau lost 9 percent and Sands China fell 6 percent as investors fretted about the near-term potential loss of business as well as the longer-term implications of the watershed hardline stance being taken towards the sector by authorities in Macau.
Alvin Chau, founder of Suncity — a junket operator that brings in high rollers to play at casinos, extending them credit and collecting on their debts — and CEO of gambling sector investment firm Suncity Group Holdings, was among those arrested.
Macau authorities previously said police were questioning him, telling a news conference on Sunday that a 47-year-old tycoon surnamed Chau had been detained.
Those developments came on the heels of an arrest warrant issued on Friday by Wenzhou, a city in east China’s Zhejiang Province, for Chau, accusing him of operating gambling activities in mainland China where gambling is illegal.
“Suncity accounts for over 50 percent of junket revenue (in Macau), which accounts for roughly 50 percent of gaming revenues, so Suncity accounts for 25 percent of gaming revenues,” said Carlos Lobo, a Macau-based gaming consultant.
“The impact on the gambling industry is huge ... But (Suncity) is no longer too big to fail, the system will not collapse.”
Suncity Group Holdings did not immediately respond to a request for comment.
Macau police said on Sunday the 11 people arrested had admitted some charges, including setting up overseas gambling platforms and conducting illegal virtual betting activities, but declined to cooperate on other issues.
Wenzhou authorities have accused Chau of forming a junket agent network on the mainland to help citizens engage in offshore and cross-border gambling activities as well as setting up an asset management company to help gamblers to make cross-border fund transfers.
The crackdown signals a new era for gambling in Macau and its relationship with the mainland, said Ben Lee, founder of Macau gaming consultancy IGamiX.
“It means that China will no longer tolerate Macau promoting gambling into the mainland, in any form or manner,” he said.
Shares in Suncity Group, which has a market valuation of HK$1.7 billion (US$220 million), were suspended from trade yesterday. They have plunged 165 percent so far this year as Macau casinos struggle with a dearth of travelers due to coronavirus restrictions.
Chau is also a controlling shareholder in Sun Entertainment Group Ltd, a film production and cremation services firm, whose shares fell 25 percent yesterday. Its board said it did not believe that issues relating to the personal affairs of Chau would have a material impact on its business.
Before the COVID-19 pandemic, Macau’s government obtained more than 80 percent of its tax revenues from the gambling industry, which employed about three-quarters of the territory’s 600,000 population.
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