Overseas casinos clean up despite China’s cash curbs

SAIPAN, Dec 11:  For evidence of the odds stacked against China’s battle to stop the flight of cash battering its currency and draining its reserves, look no further than the tiny Pacific island of Saipan, which has hit the jackpot with a flood of Chinese money at its new casino. Thousands of miles from the Chinese mainland, the US-administered island of 50,000 people is festooned with signs written in Chinese and stuffed with Chinese supermarkets, restaurants and karaoke parlours serving the 200,000 Chinese visitors that arrived this year. Private jets bring big spenders so free with their cash – and 100 million dollar credit lines – that the modest Best Sunshine casino, owned by Hong-Kong listed Imperial Pacific, wildly outperforms the top casinos in Macau, the world’s biggest gambling hub. Best Sunshine’s 16 VIP tables can turn over 3.9 billion dollar a month, while the world’s biggest, the Venetian Macao, manages about 2.5 billion dollar per month on 102 VIP tables, and the MGM around 2.9 billion dollar on 161. “Never have I dealt with so much money in 36 years in casinos,” said one executive working in the casino, who could not be named due to company policy. Back in Beijing, policymakers are trying to keep that money on the mainland. Capital outflows, both legal and illegal, have dragged the yuan to eight-year lows this year, prompting China to eat through more than a fifth of its foreign currency reserves since mid-2014 and impose a series of measures to stem the outflows. Such measures, plus an anti-corruption crackdown that began in early 2014, has dealt a blow to Macau, the self-governing Chinese territory linked by a thread to the mainland province of Guangdong. Macau’s gaming revenues have more than halved since then, as high rollers from the mainland gave it a wide berth. But whacking the mole in Macau has made it pop up elsewhere, where China’s writ doesn’t run; in Saipan, the Philippines, Cambodia and Australia. Manila’s Solaire casino registered a 61 percent increase in VIP turnover in the third quarter, while the number of junket operators bringing in foreign high rollers has more than doubled. Half of its VIP gamblers come from China. NagaCorp in Phnom Penh has seen a 13 per cent increase in Chinese visitors in the first half of 2016, with VIP turnover up 11 percent for the first nine months. HOUSE WINS
China has fought to suppress the demand, detaining marketing employees from Australia’s Crown Resorts in October for “gambling offences”, and arresting South Korean casino managers last year for “enticing” Chinese to gamble overseas. “We have always asked that Chinese citizens leaving the borders respect the laws and rules of relevant countries, and not get involved in gambling or gamble themselves,” Chinese foreign ministry spokesman Lu Kang told a daily news briefing in Beijing. But the casinos are getting ready for more. NagaCorp is building additional facilities and a luxury retail complex, while Solaire, where VIPs play in opulent ocean-front rooms, is also unrolling new amenities to lure VIPs. Imperial is spending 3 billion dollar to build a 14-storey resort in Saipan after winning a 40-year exclusive monopoly licence. Its towering bamboo scaffolding already dwarfs the low-rise local buildings. The man behind Imperial’s push into Saipan, Ji Xiaobo, a one-time middleman whose company brought players to Macau, is also in discussions with nearby Pacific island Palau to set up a small resort, according to a source familiar with the deal. Ji, who casino executives said brings VIP players to Saipan on his private jet and accommodates them on his yacht or in opulent villas, declined to comment. Saipan’s government, desperate for revenues after the collapse of its garment industry and a decline in tourism, approved the casino in 2014, overturning longstanding opposition. It makes it very attractive for the operator, with just 5 per cent gaming tax compared with Macau’s 39 percent, said Mark Brown, Imperial’s chief executive, who formerly worked for US casino tycoons including president-elect Donald Trump, Steve Wynn and Sheldon Adelson. Not everyone on the island thinks Saipan gets much benefit. Casino revenues have surged, but the government budget remains less than a sixth of what the casino produces annually, said local resident Glen Hunter, who has fought against the development. “You have created an entity out here with so much resources and power that I think we will no longer even have a proper functioning democracy,” Hunter said. The influx of money is already changing the nature of the place. Chinese investment in Saipan has skyrocketed since the casino opened last year, with almost every available property bought in the last six months, say local residents. “I’ve also had Chinese investors just knock on my door and offer to buy my house, in cash,” said Harry Blalock, who runs dive company Axe Murderer Tours. (AGENCIES)


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