GGRAsia – Suncity denies online gaming claims made in Chinese media

Suncity denies online gaming claims made in Chinese media

Jul 09, 2019 Newsdesk Latest News, Macau, Top of the deck

Macau junket investor Suncity Group has issued a statement denying reports in the mainland China media that the brand was involved in what the state backed Economic Information Daily and news agency Xinhua referred to as “online gaming” and “proxy betting”.

But privately-held Suncity Group hit back, saying it “strongly condemns” the initial Economic Information Daily report, and added it was “false” and contained content published that was “mostly conjectures” and “seriously damages” the group’s corporate reputation. The statement was issued only in Chinese.

The Monday rebuttal from the privately-held Suncity Group had stated: “Our company’s VIP gaming promotion business is legal, and never owned any gaming venues or gaming tables. Our company also does not operate any online gaming business.”

The company added: “The VIP gaming promotion business that the group and other of its entities undertake in Macau and in other countries or regions are all licensed, legitimate and regulated by the governments in the respective jurisdictions.”

Economic Information Daily, an affiliate of state-owned Xinhua, asserted in its initial report – also published solely in Chinese – that it had contacted about “30 players” said to have used online gaming services associated with the Suncity brand.

Economic Information Daily’s Monday story alleged that through Suncity Group’s promoted gaming venues in Macau, the brand had signed up mainland Chinese patrons for an online gaming application available outside Macau.

The stock of Suncity Group Holdings Ltd, a Hong Kong-listed firm controlled by Suncity Group boss Alvin Chau Cheok Wa, was down sharply by circa 20 percent on the day during Tuesday trading. The listed entity does not currently have in its portfolio any gaming-related assets or any of the Macau junket-related businesses of privately-held Suncity Group.

The Hong Kong-listed entity using the Suncity brand name has a number of agreements to manage several casinos in Southeast Asia, including one at Sihanoukville in Cambodia, and another in Hoi An, Vietnam. The listed entity is also an equity investor in the latter Hoiana scheme, which is yet to open.

“Warning message?”

Brokerage Sanford C. Bernstein Ltd said in a Tuesday memo, referring to Monday’s media report, that it was “too early to tell what ramification this article brings (if any)”.

“From our recollection, this is the first time official Chinese press has linked a junket with online gaming activity,” said the Sanford Bernstein team. “The article itself could be a warning message for Suncity and maybe other online gaming/proxy betting operations to tone down excessive offshore play.”

“Junkets may face greater scrutiny on their offshore businesses, some game play may gravitate back to Macau as players may retreat from online play and junkets may face greater scrutiny in Macau on how they interact with players; with respect to signing them up for online accounts” while they are in Macau, the brokerage remarked.

The Economic Information Daily report also suggested people associated with the Suncity brand had assisted consumers in settling proxy wagers in Chinese yuan.

The media outlet had claimed proxy betting by customers linked to the Suncity brand had occurred at bricks and mortar casinos in the Philippines and Cambodia. Such live games were said to have been streamed on live video via the “online gaming application”. Proxy betting via licensed casinos should not generally be confused with live streaming games delivered by gaming studios in some Southeast Asian locations including reportedly Sihanoukville – and on occasion featuring scantily-clad female croupiers.

The Economic Information Daily’s Monday report called the proxy betting it linked to Suncity Group “the largest poppy flower” in mainland China, citing several unidentified sources said to be linked to the country’s internal law enforcement agency, the Public Security Bureau, claiming proxy play could cause capital outflow via underground banks.

Macau’s casino regulator, the Gaming Inspection and Coordination Bureau, issued guidance in 2016 that it wished to see an end to so-called proxy gambling in Macau casinos. No information has subsequently emerged locally to suggest the junket sector within Macau was breaching that guideline.

Under a proxy betting system, patrons not physically present in a casino can order someone – via telephone or via other online communication – who is actual in the casino – a “proxy” – to place a bet on their behalf. Some commentators and foreign governments have said that such play calls into the question the ability of casino operators to operate effectively a “know-your-customer” protocol recommended as best practice for anti-money laundering efforts.