Chinese officials and the Gaming Inspection Coordination Bureau, known as the DICJ, are cracking down hard on corruption in the Macau gambling industry. A new provision will officially ban ‘Proxy Betting’ on May 9 th in a misguided effort to end illegal activities within the Macau gambling industry.
‘Proxy Betting’ or gambling by proxy is essentially the act of hiring a third party to place bets or gamble in your absence at the casinos of the region. It is not necessarily a common practice, estimated to account for between just 5 and 10 percent of the VIP gaming activity on average.
The practice of proxy betting arose out of other political measures carried out throughout the region by Chinese officials to attempt to ‘purge’ Macau of criminality. Beijing’s crackdown on the corruption in the area had already caused many of the wealthier and more influential figures in China to avoid travel to
To get around the implications, prominent figures often hire a trusted “proxy” player to make both the journey and bets by sharing the details of a game via cellphone with the VIP in real-time. This allows VIPs to participate in the gambling action without alerting the authorities, scrutiny by the Chinese government, or the closely related Chinese Media.
The Casino industry in Macau has been a key stimulation of the local economy, bringing international tourists and VIP players from around the world to vacation at some of the decadent Casino resorts. Macau’s economy was on the rise until early to mid-2015, but has rapidly declined over the past two years due to the pressures put on the region by Chinese officials, the DICJ and Casino regulators. This new ban, and other law enforcement crackdowns, have caused the region’s gambling industry major financial losses particularly in the VIP market sector.
Prior to the ban, Proxy betting was tolerated under the mandatory stipulation that no live video feeds or real-time transmissions took place in the VIP rooms. The activity was not tolerated at all Casinos, particularly US-based companies concerned that proxy players would violate their own ‘know your customer’ practices, common in American Casinos. They cannot know their customer without the customer being formally present and playing at the table. For American owned and operated casinos in Macau, this new ban will have changed nothing for how their VIP rooms are operated.
Per Steve Wynn, Chairman of the Board and Chief Executive Officer of the Wynn Macau enterprise of casinos and resorts, the Macau Casino Regulators and the DICJ, have “… ended it. Okay, as of now it is illegal, there is no more phone betting. They stopped it today, the [Gaming Inspection Coordination Bureau of DICJ] made it official. It is finito.”– a full transcript can be found in this article by The Street. Matt Maddox, president of Wynn Macau, in response to being asked about the affect this crackdown will have on Wynn Macau’s future net profits said, “insignificant to Wynn, I can tell you.”
Until the recent crackdowns, VIP targeted services and VIP patrons poured billions into the once-thriving Macau VIP gambling industry. If they kill the Macau economy in the process of rooting out corruption, they’ve done much more harm than good. But only with the passage of time will the true effects of this policy reveal what the economy hopes will be mostly ineffective in its impact on the economies struggling VIP market. The industry can only hope that future policy doesn’t see further decline in what many hopeful investors of various new resorts expect will one day see the industry return to even more economic growth than it saw at its peak.