Overseas casinos clean up despite China’s cash curbs
For evidence of the odds stacked against China’s battle to stop the flight of cash battering its currency and draining its reserves, look no further than the tiny Pacific island of Saipan, which has hit the jackpot with a flood of Chinese money at its new casino.
Thousands of miles from the Chinese mainland, the US-administered island of 50,000 people is festooned with signs written in Chinese and stuffed with Chinese supermarkets, restaurants and karaoke parlors serving the 200,000 Chinese visitors that arrived this year. Private jets bring big spenders so free with their cash - and $100 million credit lines - that the modest Best Sunshine casino, owned by Hong-Kong listed Imperial Pacific, wildly outperforms the top casinos in Macau, the world’s biggest gambling hub. Best Sunshine’s 16 VIP tables can turn over $3.9 billion a month, while the world’s biggest, the Venetian Macao, manages about $2.5 billion per month on 102 VIP tables, and the MGM around $2.9 billion on 161. “Never have I dealt with so much money in 36 years in casinos,” said one executive working in the casino, who could not be named due to company policy.
Back in Beijing, policymakers are trying to keep that money on the mainland. Capital outflows, both legal and illegal, have dragged the yuan to eight-year lows this year, prompting China to eat through more than a fifth of its foreign currency reserves since mid-2014 and impose a series of measures to stem the outflows.
Such measures, plus an anti-corruption crackdown that began in early 2014, has dealt a blow to Macau, the selfgoverning Chinese territory linked by a thread to the mainland province of Guangdong. Macau’s gaming revenues have more than halved since then, as high rollers from the mainland gave it a wide berth. But whacking the mole in Macau has made it pop up elsewhere, where China’s writ doesn’t run; in Saipan, the Philippines, Cambodia and Australia.
Manila’s Solaire casino registered a 61 percent increase in VIP turnover in the third quarter, while the number of junket operators bringing in foreign high rollers has more than doubled. Half of its VIP gamblers come from China. NagaCorp in Phnom Penh has seen a 13 percent increase in Chinese visitors in the first half of 2016, with VIP turnover up 11 percent for the first nine months.
China has fought to suppress the demand, detaining marketing employees from Australia’s Crown Resorts in October for “gambling offences”, and arresting South Korean casino managers last year for “enticing” Chinese to gamble overseas. “We have always asked that Chinese citizens leaving the borders respect the laws and rules of relevant countries, and not get involved in gambling or gamble themselves,” Chinese foreign ministry spokesman Lu Kang told a daily news briefing in Beijing. But the casinos are getting ready for more.
NagaCorp is building additional facilities and a luxury retail complex, while Solaire, where VIPs play in opulent ocean-front rooms, is also unrolling new amenities to lure VIPs. Imperial is spending $3 billion to build a 14-storey resort in Saipan after winning a 40-year exclusive monopoly license. Its towering bamboo scaffolding already dwarfs the low-rise local buildings. — Reuters
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