Mon, Jul 08, 2013 - Page 9 News List

US casinos play Russian roulette in Macau

Pulling in four times as much annual revenue as Las Vegas and Atlantic City combined, Macau is the world’s undisputed gambling hub, but with big profits comes big risks in the form of organized crime and corruption

By Hannah Dreier  /  AP, LAS VEGAS, Nevada

Justice Department spokesman Michael Passman declined to comment on the probe. Sands says it is cooperating with federal prosecutors. Company spokesman Ron Reese said the firm’s dealings in Macau attract more scrutiny because it is the world’s largest gambling market, but Sands is diligent wherever it operates.

Sands opened for business in Macau in 2004, at the beginning of a massive boom in China’s economy that has lifted the incomes of hundreds of millions of people, allowing them to afford upscale pleasures like gambling in casinos.

Today, the former backwater is in the midst of one of the greatest gambling booms the world has ever seen. To rival the money it takes in, Las Vegas would have to attract six times more gamblers each year than it does now — essentially every adult in the US. Wynn Resorts now makes nearly three-quarters of its revenue in Macau. Sands, which owns the Venetian and Palazzo in Las Vegas, earns two-thirds of its revenue there.

However, like early Las Vegas, Macau has a long history of ties to crime syndicates, in this case, secretive brotherhoods called triads that first formed on the mainland more than a century ago. Machine-gun shoot-outs, bombings and even assassinations of government officials were commonplace during magnate Stanley Ho’s four-decade monopoly of gambling. In the late 1990s, a police official tried to reassure visitors by remarking that Macau had “professional killers who don’t miss their targets.”

The history and regulations governing the enclave continue to make it tricky for modern casinos to avoid gangs, illegal money transfers and, at least, the appearance of bribery.

Businesses operating there can expect allegations against them, true or not, said Bill Weidner, who was president of Sands until 2009.

“Macau is their country, not ours, and it’s their system, not ours, and it operates differently than ours. It’s not better or worse, just different,” he said.

Local policies are partly to blame. China bans its citizens from transferring more than US$50,000 off the mainland each year, a pittance at many high roller tables and nowhere near enough to account for the towers of chips that change hands in Macau. It also bans casinos from pursuing gambling debts. Another is the lack of reliable credit risk information in China, which makes it hard for casinos to figure out whom they should lend to.

Partly as a result, a thriving junket system has sprung up, with supercharged travel agents whisking VIPs to the gambling tables, lending them money and then settling up on the mainland.

Junket operators often assume management of a casino’s private VIP room. Casinos provide the facilities, dealers and chips in return for a cut of the profits. Baccarat played in VIP rooms accounts for two-thirds of Macau’s annual gambling revenue.

The informal banking and debt collection system provides a veil and an impetus for criminal activity, according to experts and diplomatic cables.

Junkets “allegedly work closely with organized crime groups in mainland China to identify customers and collect debts’” and “work directly with Macau casinos to buy gaming chips at discounted rates, allowing players to avoid identification,’’ according to a 2009 memo apparently from the US consulate in Hong Kong posted by WikiLeaks.

This story has been viewed 2273 times.
TOP top