Proxy betting banned from Macau starting Monday

May 06, 2016 Newsdesk Latest News, Macau, Top of the deck  

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Authorities in Macau have banned proxy betting from the city’s casinos, announced on Friday the local casino regulator, the Gaming Inspection and Coordination Bureau, known by its Portuguese acronym DICJ.

The ban will be enacted starting on Monday, the bureau told GGRAsia in an email.

The DICJ stated: “In the past, the bureau allowed phone use by certain VIP gamblers at gaming tables, and issued related guidelines. But the practice invited misunderstandings and doubts. Hence, the DICJ is imposing a ban on phone usage at gaming tables with effect on May 9.”

The statement did not elaborate on what the bureau meant by “misunderstandings” and “doubts”.

The confirmation came after industry sources on Thursday began talking publicly about a potential ban on proxy betting.

“There’s no more phone betting. They stopped it today,” Wynn Macau Ltd’s chairman Steve Wynn said on Thursday during a conference call with investment analysts to discuss the first quarter results of parent firm Wynn Resorts Ltd.

“The DICJ made it official. It’s finito,” Mr Wynn said.

Phone betting is a practice whereby an agent or third party – usually a junket representative – makes a bet in person on a VIP room table game, on behalf of a client ordering the wager via a mobile online device or telephone.

One problem with telephone betting, say several gaming lawyers spoken to by GGRAsia, is that the practice risks creating a loophole regarding the “know your customer” protocol. Such a protocol is encouraged under best international practices on tackling the threat of money laundering.

The ban on proxy betting in Macau comes amid China’s anti-corruption campaign. The drive includes measures to curb graft by public officials, and the laundering of money gained via acts of corruption such as influence peddling or theft of public assets.

A top executive from another Macau casino operator also had mentioned, on a Thursday first quarter results conference call, the proxy betting issue. The remarks had come only hours before Mr Wynn’s comments.

“On proxy betting, I think it seems [there] is going to be a government announcement in the next few days to clarify the situation with that,” said Grant Bowie, chief executive of MGM China Holdings Ltd.

He added: “Whatever happens in the notion of proxy, it will probably be yet another continuation of pressure for the junkets themselves, but it probably is not going to be that significant for any of the [casino] operators, certainly not that significant for us.”

During Thursday’s conference call, Wynn Macau’s management said the exposure of the company to proxy betting was “insignificant”.

In an earlier note also on Thursday, Sterne Agee CRT analyst David Bain had mentioned industry sources citing an official instruction from the DICJ banning proxy betting in Macau.

“We believe phone betting accounts for around 5 percent to 10 percent of VIP gross gaming revenue,” Mr Bain wrote. VIP baccarat revenue in Macau for the first quarter of 2016 was MOP30.38 billion (US$3.80 billion), according to official data.

He added that as of the time of writing: “The only operator that does not allow phone wagering in Macau is [Sands China Ltd]. For other operators, we anticipate some potential disruption to their VIP businesses.”

Mr Bain however stated that the impact of the measure on casino operator earnings before interest, taxation, depreciation and amortisation “should be fairly minor given thin VIP margins.”

Sands China discontinued phone betting in October 2014. In a statement sent to GGRAsia on Friday, the firm highlighted it “prohibits the use of electronic devices at gaming tables and only accepts bets from patrons at the table.”

“While Wynn Macau also stopped the practice temporarily around the same time, it restarted it in the first half of 2015,” according to Sterne Agee CRT.

(Updated at 5.50pm, May 6)

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