Digital yuan paves the way for Macau casino currency changes

By Ethan Anderson Updated
Macau and Chinese authorities arrest 46 people for suspected loan sharking

Macau’s current casino concessions are up for renegotiation in 2022 and it’s an opportunity for regulators to flex their muscles.

Reuters reports that as Macau’s casino owners prepare to bid for new licences in the city for the first time in two decades, regulators will be sure to use the opportunity to squeeze more out of them in 2022.

As current concessions for the $37 billion market expire, companies like Sands China and Wynn Macau will be eager to prove themselves team players.

A government consultation paper on the rebidding process pitched ideas like appointing government agents to supervise daily operations to prevent corrupt actions.

The average high roller lost more than $27,000 on each visit to the tables in Macau, Bernstein analysts estimate.

In December, junket operator Suncity’s boss Alvin Chau was implicated in an investigation into illegal gambling and Suncity facilitating bets for wealthy VIPs.

Digital currency has cross-border payment and crime fighting benefits

Just one month earlier, central bank governor Yi Gang suggested China’s newly developed digital yuan cryptocurrency could be useful for fighting crime and resolving complex cross-border payment problems, including money laundering.

Migrating the gambling hub to digital payments would complement Beijing’s desire for greater oversight of cash flows and customers.

Situated outside Chinese capital controls, Macau is also an ideal place to test the technology before rolling it out more widely on the mainland.

Others are already considering the concept of cashless casinos using traceable funds.

Australia’s Star Entertainment has said it is exploring digital payments.

VIP favourites like Galaxy Entertainment and Wynn Macau might once have worried that big spenders would shy away from such scrutiny.

However, high rollers no longer rule income statements.

The mass market now accounts for two-thirds of gaming revenue and almost 90 per cent of earnings according to official data.

Testing is already underway for digital currencies and pilots have seen Chinese consumers splurge some $10 billion worth of digital yuan.

While watchdogs have plenty to gain and operators have less to lose, 2022 could see new currency at more casinos.

Macau gaming report is largely positive for operators

The Macau government has released the results of its public consultation for its new gaming law and despite the details being vague, the overall tone is positive and should reduce investors’ fears about the long-term prospects of the Asian market.

The government’s summary paper makes it clear that the government has heard some of the concerns put forward during the 45-day process, especially in regard to increasing the local shareholding, board supervision and the ability to distribute dividends.

“Overall, we believe this summary should somehow ease investors’ concerns on the sector’s longer term outlook including shareholding structure, ability to pay dividend and more importantly, shed some light on the government’s consideration for the gaming licence,” Credit Suisse analyst Kenneth Fong said.

A total of 28 parties expressed their opposition to a government proposal to restrict dividend payments, with only 18 in favour.

The government said the proposed pre-approval measure is not aiming at restricting the distribution of profit, which is a normal commercial activity, but to ensure the casino operators have sufficient capital for future development and non-gaming investment.

Fong wrote that the government may set a clear formula for operators’ liquidity requirements to meet before they begin to pay dividends.

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