HONG KONG (Reuters Breakingviews) – China will bet on the digital yuan. As Macau casino owners prepare to bid for new licenses in the city for the first time in two decades, regulators will take the opportunity to get more out of it in 2022. Expect them to oblige offshore gaming center operators test beds for the digital yuan.
As the current concessions for the $ 37 billion market expire, companies like Sands China and Wynn Macau will be eager to prove they are team players. Regulators are already flexing their muscles. A government consultation paper on the new bidding process presented ideas such as appointing government officials to oversee day-to-day operations.
The average high roller has lost more than $ 27,000 every time they visit Macau tables, analysts at Bernstein say. It is also a haunt of corrupt officials and businessmen. In December, Alvin Chan, the boss of junket operator Suncity, was involved in an investigation into illegal gambling. Suncity made betting easier for wealthy VIPs, a market segment worth around $ 8 billion in gaming revenue the year before the Covid-19 strike. A month earlier, central bank governor Yi Gang had suggested that China’s new cryptocurrency could be useful in tackling crime and solving complex cross-border payments issues, including money laundering. Macau might have been on his mind.
The gaming hub’s migration to digital payments would complement Beijing’s desire for greater oversight of cash flow and customers. Located outside of Chinese capital controls, Macau is also a great place to test the technology before rolling it out more widely on the mainland. Others are already considering the concept of cashless casinos using traceable funds. Australian Star Entertainment, for example, says it is exploring digital payments to appease its watchdogs.
VIP favorites like Galaxy Entertainment and Wynn Macau might already have feared the big spenders would shy away from such scrutiny. However, the big guys no longer rule the income statements https://www.breakingviews.com/considered-view/macau-moguls-downfall-is-good-news-for-casinos. The mass market now accounts for two-thirds of gaming revenue and almost 90% of revenue according to official data and Breakingviews estimates.
The technology is there: Testing is already underway, and pilots have already seen Chinese consumers splurge for some $ 10 billion digital yuan. While watchdogs have a lot to gain and operators have less to lose, 2022 will be the year of the new currency in casinos.
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(Edited by Pete Sweeney and Thomas Shum)
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