For years, Asia’s major gambling figure Alvin Chau has been running a business that took place in the back rooms of Macau casinos, with that business being able to rival the biggest US casino companies, as well as an online betting operation that was two times bigger than the national lottery of China.
As gambling remains illegal in mainland China, the special administrative region of Macau which was once a Portuguese colony has long been a desired destination for the affluent gamblers in the country.
Before the Covid-19 pandemic outbreak, the turnover generated by the 40+ casinos in Macau was almost six times bigger than the one generated by the casinos in the gambling Mecca of Las Vegas. The massive scale of the Macau gambling industry was the reason why some US casino operators decided to primarily concentrate on the expansion and development of their Asian operations.
However, Alvin Chau, who has been one of the main figures in the special administrative region’s gambling industry, was sentenced to 18 years in prison after being found guilty of fraud, illegal gambling and involvement in organized crime. Now, his downfall, driven by the determination of the Government of mainland China to stop the escape of elite capital through Macau, is expected to bring some serious changes to the gambling industry in the special administrative region.
After almost twenty years of rising casino profits, analysts of the Asian gaming market believe that the sector will face much more difficult times, with the volatile rise of gambling revenue no longer set to be seen. According to market experts, it would be an extremely difficult task to replace the loss of affluent high-rollers’ money with revenue generated by the mass market or the venues’ non-gambling offering.
Illegal Gambling Operations, Fraud and Links to Organized Crime Resulted in Chau’s Imprisonment Sentence
As revealed by a 2018 due diligence report by the Hong Kong Jockey Club, junket mogul Alvin Chau was a protege of the 14k organized crime group’s leader Wan Kuok-koi, also known as “Broken Tooth”. Then, Mr. Chau became the head of the junket operator Suncity and entered the gambling, marketing and entertainment business. His business relied on affluent high-rollers who visited Macau’s casinos. Apart from attracting them and bringing them to Macau to gamble in local casino venues, junket operators also extended credit to such customers.
As recently reported by CasinoGamesPro, the judgment released by the court that sentenced the junket operator mogul to 18 years in prison states that Mr. Chau ran an illegal gambling operation that generated a turnover of almost HK$821 billion in the eight years between March 2013 and March 2021. According to the judgment, that amount was equivalent to the revenues generated by the three largest US casinos operating in the city over the same period.
The size of the illegal gambling trade has reflected the fact that junket operators were used by some affluent residents of China to channel large amounts of money out of the country by depositing funds in junkets and underground banks’ accounts in the mainland and then cashing their unused casino chips out in a convertible currency such as Hong Kong dollars and sending it out of the country.
According to casino executives, the illegal gambling turnover of Suncity clearly showed that Alvin Chau was unmatched in his ability to attract high-roller elite from mainland China to Macau, and players literally could not avoid dealing with him.
Apart from his massive influence in the local gambling hub, Mr. Chau’s reach extended far beyond Macau and China. A number of casino operators in Australia have had their operating permits suspended after allowing Suncity to offer its junket gambling services there and run VIP high-roller gambling rooms on their premises. According to one of the few Australian Government reports that followed thorough investigations into the local casinos’ operations, the VIP room run by Suncity at the Melbourne Casino of Crown Resorts was an important part of the money laundering chain operation linked to Alvin Chau’s activities.
Now, market experts have noted that the 2021 arrest of Mr. Chau and his recent 18-year imprisonment sentence are set to pave the way for more limited profits for international casino operators. Suncity is still listed on Hong Kong’s stock exchange under a new name – LET Group – but has ceased its junket room operations and reduced workers. Furthermore, rival junket operators in Macau have preferred to keep a low profile following the arrest, with the VIP gambling business, which in 2019 generated almost half of the casino revenues in the region (46%), being effectively cut off by the Government of mainland China. Analysts have noted it would be interesting to see how long it would take for the market to fill the void and projected that VIP gambling in Macau would no longer be the same.
