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China’s Proposed Gambling Law to Criminalize Cross-Border Gambling Promotions
By Jeff Osienya Oct 15, 2020 LegalityIn its fight to prevent its high roller gamblers from being targets by offshore gaming facilities, China is chewing over a new radical law that will criminalize the promotion of cross-border gaming.The Committee of the National People’s Congress (NPC) of the People’s Republic of China, is mulling over the amendment of criminal law to take a harsher stance on cross-border gambling. Earlier in the week, China News Service, the country’s state-run media published a report indicating that from this new legal standpoint, the state will officially criminalize “organising and soliciting by casinos abroad”.
Nevertheless, the media service didn’t disclose anything about the penalties for the new crime involving offshore casino facilities and mainland China citizens. There was also no indication for when this new law will officially come into effect in the People’s Republic. Similarly, the media report also had no information about a proper definition of overseas gambling in the eyes of the government.
Without attributing any specific source, the state-run media’s publication also highlighted official criticism against cross-border gambling indicating that it had led to a “large outflow of capital” and “serious damage to national image and economic security”. As it stands, the NPC has already advanced to the second reading of this new law.
Will Macau be Affected by the New Law?
No gambling is currently allowed in Mainland China. The online region where gambling is legally allowed is in the Macau peninsula, which is conveniently an hour’s ride on the Ferry away from Guangzhou and Hong Kong. Macau, hailed as the world’s premier gambling destination is home to some of the largest and the most popular casinos where Chinese high rollers frequently visit to quench their gambling thirst.
From what industry experts are saying, the new gaming law won’t apply to Macau’s casino once it’s approved. Of course, this will be a huge relief for the special administrative region as over 50% of its casino revenue comes from VIP gamblers from China.
However, should the law come into effect, it will without a doubt affect both land-based and online gambling operators based in Vietnam, South Korea, the Philippines, and Australia, among other regional gambling epicenters. Essentially, countries and regions that analysts purported will be targeted by China’s recently announced an overseas gaming destinations blacklist are going to be affected.
Junket Operators Continue to Cave Under Oversight Pressure
Over the past decade, China has been seeking means to tighten its grip on gambling. The scrutiny started getting more deliberate in 2013 when six of Macau’s largest licensed casino operators racked up a whopping $45 billion in revenue. In that same year, China’s President Xi Jinping instructed his law enforcement officers to put a bigger microscope on VIP junket groups to have better control of the local VIP gambling market.
Since then junket operators have been seeking refuge in other more lucrative markets as they got wary of the increased oversight. For the past six years, the number of junkets licensed in Macau has been reducing year after year, leaving only 95 operators on the books by the end of 2019. Effectively, the volume of revenue collected from junkets has also been reducing significantly.
The Macau government recently reported that it had garnered about $50 million in taxes from the commissions that were paid out to junkets by the casino operators in the SAR in 2019, which is a decline of almost 25% year-on-year. The tax collected also fell short, representing only about 83% of the original tax target that the government had projected for 2019.
For clarification purposes, junket operators work with the multibillion-dollar resorts in Macau and they get a guaranteed share of the revenue from VIPs from mainland China. These junket groups work on commission but usually have an added responsibility of recouping any debts owed by the VIPs to the casinos.
For now, let's just wait and see what this proposed law is all about, and how it may further affect the junkets should it be okayed by China’s legislators.
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