China's currency controls fuel Macau crime, Nevada gaming boss says
Reuters in Washington
China’s currency controls create incentives for Chinese gamblers to launder their winnings through organised crime gangs in Macau, Nevada’s state gaming regulator said on Thursday.
Testifying before a US congressional advisory panel investigating money laundering in Macau, A.G. Burnett, chairman of the Nevada State Gaming Control Board, said he regulates three US-owned casinos on the island, but he can only do so much.
“The risk, if I can speak frankly, is China’s, and I know that they are trying to crack down on corruption and items that may bring disrepute to them,” Burnett told the US-China Economic and Security Review Commission in Washington.
Currency controls “is one area that they could probably change that may reduce that risk,” he said.
The former Portuguese colony overtook Las Vegas in 2007 to become the world’s biggest gambling hub.
China forbids its citizens from taking more than 20,000 yuan ($3,150) out of the country - a limit that drives Chinese high rollers to seek illegal ways to move cash across the border to Macau, a semi-autonomous region of China since 1999.
“That limit is so small, and whenever you have currency restrictions like that, it’s going to cause all sorts of distortions,” I. Nelson Rose, an expert on gaming law at Wittier Law School in California, testified.
“They will find ways to get money out of China,” he said.
To get around these limits, Chinese high rollers turn to VIP junket operators, who use elabourate methods to lend money to gamblers and settle any subsequent debts, often without a paper trail. Many are believed to be linked to organised crime groups known in the region as “triads.”
Rose described high-end jewelry shops in Macau casinos that ostensibly sell expensive gold watches, but, in fact, funnel cash to Chinese gamblers through credit card transactions that look like purchases.
Beijing has stepped up efforts to stop Chinese officials using public money or putting up state assets as collateral for gambling debts in Macau, the only place in China where casino gambling is legal.
Macau’s casino revenue hit $38 billion last year, seven times Las Vegas’s $6 billion, and these VIP junket operators draw in about two-thirds of the revenues, Burnett told the panel.
Macau’s 35 casinos are operated by six licensees, three of which are subsidiaries of Nevada gaming companies: Wynn Resorts; Las Vegas Sands; and MGM Resorts International.
“With the entrance of our Nevada gaming licensed operators, much of those triad activities have actually decreased in one fashion or another,” said Burnett.
“We have not seen any organised crime occur with our Nevada gaming licensees,” he told the panel.