Alvin Chau, once one of Macau’s highest-profile gambling promoters, has been sentenced to 18 years in prison, in a signal of Beijing’s crackdown on capital outflows and cross-border offences in the Chinese territory’s gaming industry.
Chau, the former chair of Suncity Group, the Chinese gambling hub’s biggest “junket” operator, was convicted of illegal gambling, fraud and involvement in a criminal organisation. He was not convicted on money laundering charges.
Junket companies enjoyed a lucrative trade supporting casino operators by extending credit to lure wealthy Chinese high rollers to Macau, which outstripped Las Vegas in gaming revenues prior to the pandemic.
But the city suffered dramatic losses after it was effectively cut off from the rest of the world and mainland China under Beijing’s zero-Covid policy of containing the virus.
Chau was arrested in 2021 over alleged cross-border gambling offences, while an Australian government inquiry that year accused him and Suncity of links to organised crime groups.
The former “junket king” is the highest-profile target of Beijing’s efforts to exert greater control over Macau’s gambling industry and limit capital outflows. Levo Chan, the former chief executive of the second-largest junket business Tak Chun Group, was detained the same year, as Chinese authorities imposed tougher regulations on casinos.
“The prosecution of Macau’s largest two junkets, who prior to Covid were estimated to command 70 per cent of the VIP market and 25 per cent of overall gross gaming revenue, sends a chilling reminder to the gaming industry that no one is above reproach,” said Ben Lee, an Asian gaming expert and managing partner at IGamiX Management and Consulting.
Casino earnings from high rollers have been in long-term decline but still made up 46 per cent of total revenues in 2019, posing a considerable challenge for gaming operators to make up lost ground as they nurse scars from the pandemic.
“The trial means the end of the high volume and high-profile Macau junkets and VIP rooms,” Lee said. “Macau will, out of necessity, need to find and grow the grind mass market, a Herculean task.”
Macau’s revised gambling regulations, introduced in 2022, intensified supervision of casino operations and allowed authorities to revoke highly coveted licences, which were renewed late last year, on national security grounds.
Three of Macau’s licensed casino groups are US-owned: Las Vegas Sands, founded by the late Sheldon Adelson, MGM and Wynn. The companies operate nine resorts in Macau and have local subsidiaries listed in Hong Kong. The other three licensed operators are local groups Galaxy Entertainment, the late Stanley Ho’s SJM Holdings and Melco, which is dual-listed in the US and Hong Kong.
The junket companies, which have diversified into online gambling, used to set up rooms within casinos for their clients to gamble.
CCTV footage presented in the Australian inquiry showed gamblers at Suncity’s Sydney salon exchanging chips for brown paper bags “stuffed” with cash.
Chau’s arrest “rattled Macau, leading to a rapid decline as the current junket segment is a shadow of its former self”, said Alidad Tash, a former casino executive now at gaming consultancy 2nt8. “Its demise has also hindered the ability of premium mass and premium direct patrons to bring money into Macau.”
Additional reporting by Chan Ho-him in Hong Kong