| HONG KONG
HONG KONG May 8 Macau officials and China's state-backed
payment card network have cracked down on the use of bogus transactions to
circumvent China's exchange controls for gambling in the territory.
The crackdown follows a Reuters special report in March that highlighted the
illegal use of UnionPay cards to obtain cash through fake purchases of goods in
Macau to evade China's strict currency-export controls.
Shanghai-based UnionPay told Reuters on Thursday that the company had
stepped up control measures following a recent field inspection in Macau with
Macau government officials.
Measures included targeting cross-border point-of-sale machines (POS) used
by touts on Macau casino floors to help gamblers access cash from UnionPay
Non-registered Macau mobile point-of-sale terminals brought in from China
have proliferated in Macau over the past year, with agents blatantly offering
mainland customers the option to get local patacas on the mass halls of the
glitzy casino floors.
"We have fully implemented a series of stringent risk prevention measures,
including shutting down high-risk merchants and closely monitoring abnormally
Shares in Macau gaming companies on the Hong Kong stock exchange plummeted
on news of the crackdown, despite strong gaming revenue growth seen in the first
week of May thanks to a national holiday.
Galaxy entertainment fell 7.6 percent, MGM China dropped
8.3 percent, Sands China was down 4.6 percent, Melco Crown
declined 6.2 percent, and Wynn Macau was 2.6 percent lower.
While Chinese nationals are only allowed to take a daily limit of 20,000
yuan, or $3,200, out of China in cash, gamblers routinely get around this by
purchasing items from one of Macau's 180 pawnshops or jewellery stores using
UnionPay and getting cash back. Often no item has to be purchased with store
clerks describing the transaction as a "general sale."
Traditionally Macau has earned over 70-80 percent of its total revenues from
wealthy "whale" gamblers who wager a minimum of 1 million yuan per bet. Over the
past two years, though, growth in the high-roller segment has been overtaken by
a super-charged increase in "mass market" visitors who rely on methods such as
phoney UnionPay transactions to access extra cash for gambling.
There has been increased scrutiny on Macau by China's leaders after a series
of scandals. Earlier in May, state broadcaster CCTV aired an expose of the
popular method of entering Hong Kong and Macau by obtaining a transit visa that
allows visitors to stay in Macau for a maximum of seven days upon entry.
Circumvention of the system, whereby visitors stay and gamble in Macau, has
been happening for over a decade, but analysts say the CCTV show may suggest
tightening measures on visas may be imposed, as well as the crackdown on
exchange control violations.
(Editing by Eric Meijer)