Macau [China], October 6 (ANI): The Chinese Communist Party has started to crack down on the casino industry in Macau, one of China's special administrative regions. Those who support this crackdown say this is in order to target the "cross-border flows of funds for gambling, hitting the funding of Macau's junket operators and their VIP customers".
The party has announced various proposals including increasing the number of casino inspectors from 192 to 459. Other proposals include regulating the illegal lending and cash transfers that are linked to gambling.
Macau is the only place in the whole region where gambling is still legal.
Lei Wai Nong who is Macau's secretary for economy and finance gave notice which included a 45-day consultation period on the gambling industry, which pointed to the "deficiencies in industry supervision", Policy Research Group reported.
No elaboration was given on how the new gambling bids would be managed after the existing one would get expired in June, next month.
From September 15, the Xi government has opened up the proposals for public consultations. The most important out of those proposals are about "how many licences (known as concessions) would be allowed", how long their terms will be and the level of supervision by the Xi government.
In the end, these proposals will be turned into laws by tabling a bill in the local legislature.
The tightening controls will be implemented in time for a rebid next year for the casino licences necessary for operating in Macau. Those companies caught in the government crosshairs may lose the right to gambling permissions and with them, their investments run into billions of dollars.
Macau is the ultimate destination for gamblers from Las Vegas. A short flight or a special cruise ride away from Hong Kong, Macau's 141 casinos generated earnings of $360 billion in 2019. That is six times the Las Vegas revenue. The industry provides employment to close to 20 per cent of Macau's six lakh population and generates 80 per cent of the local government's tax revenue, Policy Research Group reported.
The news about tighter control on the casino industry has teetered the market as investors "dumped shares of casino companies with Macau properties like MGM China and Wynn Macau in record volumes, costing the industry $18 billion of market value".
According to the Bloomberg Intelligence index, the "six big casino operators fell a record 23 per cent" in mid-September.
"American operators saw the worst sell-offs, with Sands China sinking as much as 33 per cent, while Wynn Macau plunged 34 per cent, both the steepest declines ever. Galaxy Entertainment Group slumped 20 per cent, its sharpest drop in a decade", Policy Research Group reported quoting Bloomberg.
The attacks come at a time when the casino industry is still struggling to recover from the Covid-19 pandemic. Also with the travelling restrictions, these casinos did no business for months.
Other than the casino industry, Macau is also famous as a tax haven. Many millionaires and billionaires enjoy low tax rates in Macau and establish their residence there. Foreigners and nationals who are employed in the city also enjoy beneficial tax rates. Corporations also enjoy doing businesses in the city and are taxed much lesser on their corporate income and capital gains as compared to the US and Europe. And this attracts business to Macau.
This will be a notable factor if the tighter controls on the casinos would in the future also be an indication for an upward revision of tax rates in the city of Macau. (ANI)