The plans of Macau’s Government to implement and use the Chinese future digital currency are expected to help the country tackle money laundering in one of the world’s largest gambling hubs. However, it could seriously hurt so-called junket operators.
These companies are usually used by casino operators to help them attract high-roller customers to their Macau operations. They, however, have been struggling after in June 2020 the Chinese Government categorized the cross-border funds flow for gambling as a risk for national security. Since then, the authorities have cut off some cloudy financing channels used by the online gambling industry and the junket sector of Macau, with thousands of people having been taken into custody for illegal cross-border gambling.
While the Chinese Government has been imposing various measures in order to tackle illicit money flow, a large number of long-time high-rollers hurried up and withdrew their money from junket operators, which created some liquidity problems for the firms. Now, according to industry executives, the possible implementation of the country’s digital currency could make the situation for the sector even harder, as it threatens to close the remaining options for companies that are desperately trying to stay operational.
As explained by a junket industry investor cited by Reuters, Luiz Lam, the impact of the digital yuan could be extremely serious for the intermediary industries.
Illegal Transactions and Money Laundering in Macau’s Gambling Sector Will Be Controlled Better Through Digital Currency
Only recently, China unveiled plans associated with the experimental use of digital yuan in more cities across the country, after the currency was already tested in Shenzhen, Xiong’an, Suzhou and Chengdu in 2020. As the Monetary Authority of Macau shared in a statement to Reuters, it was making amendments to its legal framework in order to incorporate the digital yuan.
Executives of casino operations have shared hopes that the implementation of a fully traceable digital yuan will provide China’s Government with more confidence to open Macau for more visitors who are willing to travel to the gambling hub.
As Reuters reported, a senior casino executive in the gambling hub who refused to be named as the topic is not supposed to be shared with the media, the adoption and implementation of the digital yuan, or e-CHY as it is often called, will provide the Chinese Government with the opportunity to better control possibly illegal transactions and money laundering in the gambling sector of Macau. The executive noted that the authorities will not be willing to allow more tourists in Macau if the gambling hub is unable to control the environment.
Gambling industry executives said that one of the main risks associated with the implementation of the Chinese digital currency is the possibility that the Government could impose a daily or annual transaction limit. Still, they explained that the negative impact of such a move could be minimized in case Beijing allows more tourists to enter Macau. For the time being, visitors to mainland China account for over 70% of the total number of visits to Macau on an annual basis.
Currently, Macau is the only place in China where gambling services are allowed. Unfortunately for casino operators, their revenues in the gambling hub have been declining for more than a year now because of the restrictions associated with the coronavirus pandemic. According to reports, Macau gambling revenues suffered a decline of about 60% from 2019.
