Macau police arrest junket boss in latest blow to gaming enclave

Tokyo | Alvin Chau, the boss of a notorious Macau junket operator that has historic links with James Packer’s Crown Resorts, has been arrested as part of a Chinese government crackdown on gaming activities in the former Portuguese enclave.

VIP junket operators help organise groups of so-called “whales” to visit casinos, paying for their accommodation and facilitating their lines of credit in return for a commission.

Shares in casino operators in Australia and the region fell on Monday following the arrest of Mr Chau and 10 other people for allegedly setting up overseas gambling platforms and encouraging Chinese citizens into illegal online betting.

Mr Chau, the chief executive of Suncity Group, was the most prominent figure in China’s latest clampdown on the gaming sector. He is an alleged former triad member who has reportedly been banned from entering Australia.

An inquiry into whether Crown Sydney was suitable to hold a Sydney casino licence heard earlier this year that Mr Packer met junket operators including Mr Chau. Suncity had its own room in Crown Melbourne, where, the inquiry heard, $5.6 million was found in a cash drawer in apparent breach of anti-money-laundering regulations.

The inquiry’s report in February said Mr Chau first became a junket operator at Crown Melbourne in September 2009 and Crown Perth in June 2010.

Shares in Macau casino operators plunged on Monday, with Wynn Macau losing 8.6 per cent in afternoon trade, and Galaxy Entertainment Group losing 7.6 per cent. Trading in SunCity stock was suspended on the Hong Kong exchange. In Australia, Star Entertainment fell 2.5 per cent, and Crown slipped 1 per cent.

Crown no longer has any financial interests in Macau after selling out of Macau-focused Melco Crown Entertainment in 2016. The retreat was forced on Crown by the downturn in gaming revenues in Macau and complicated by China’s anti-corruption crackdown and the detention of Crown’s staff in Shanghai.

Chinese authorities arrested 18 Crown staff in China in 2016.

The use of junket operators, which were heavily used by Crown and Star to attract wealthy gamblers to their casinos, has since been banned.

The global pandemic is also crippling the casino industry. Border closures are preventing VIP players from entering Macau and other gaming markets. Gambling is illegal in mainland China.

Macau officials said in September they were preparing to tighten restrictions on the gaming industry. The latest arrests have cast further doubts over whether casinos will be able to renew licences that expire in June.

“The Macau government seems, under direction from Beijing, determined to diversify away from a total reliance on casino gaming; and the looming end of the concessions provides great leverage to force through the necessary changes,” according to Steve Vickers, chief executive of political and corporate risk consultancy Steve Vickers & Associates.

Gaming revenue

He estimates that Macau’s total gross gaming revenues for the 10 months to October 2021 were $US8.99 billion ($12 billion), up 57 per cent on the same period a year earlier, during the worst of the pandemic. However, that was still well below the figure of more than $US40 billion for the whole of 2013.

The crackdown will not directly affect Crown, although it reduces the chances of a rival bidder coming in to top Blackstone’s latest takeover offer if Macau-based casino groups are preoccupied with problems at home.

The Macau government said in a statement at the weekend that Mr Chau was taken to the police station in the morning after it received a notification about the arrest warrant from the mainland authorities, according to Reuters. He was accused of operating gambling activities in mainland China.

Authorities in the eastern Chinese city of Wenzhou said on Friday their investigation had found Mr Chau formed a junket agent network in the mainland to help citizens engage in offshore and cross-border gambling activities.

Mr Chau also set up an asset management company in the mainland to help gamblers make cross-border fund transfers, the Wenzhou City Public Security Bureau in the coastal city in Zhejiang province said on its Weibo account.

The use of junket operators was a big focus of the inquiry into Crown’s Sydney casino licence.

Crown declined to comment on Mr Chau’s arrest.