What an offshore gambling mecca reveals about business in China

The ignorance and lack of evidence in this article astounds me. It is all based upon unfounded speculation and lack of understanding of how VIP gaming works. A respectable publication like the Economist should be ashamed of itself for allowing it to be published.

It is the equivalent of equivocating that, “Goldman Sachs is run by a Jewish cabal that steals money from middle class America. That is why, due to its former executives in hugely conflicted political positions, the government 100% bailed out the risk exposure Goldman took through AIG and others. Approximately $20 billion went directly from middle class tax payers to Goldman executives, which promptly paid out huge bonuses. Goldman was made whole by the US taxpayer. Corzine and MF Global and its ‘missing’ funds are only the latest example of its culture of greed and institutionalized corruption.”

Not that I believe any of the above is true…just pointing out how outlandish and unfounded, not to mention racist, this article on Macau is.

Let’s look at the hard data of Macau:

How about the reporter attempting to describe how the money is supposedly “laundered?”

Gamblers NET LOSE US$3 billion PER MONTH in Macau – so, where is the “laundering?”

VIP is almost all Baccarrat, which has a 2.9% Hold. Best case, that’s not so great for moving funds, even when you do win.

Only player’s NET WINNINGS are paid out in HKD…based on the above statistics, it doesn’t seem like there is a lot of that going on in Macau.

How much VIP is actually paid in cash? Maybe 5-10%?? The vast majority is credit.

The only bright spot in Las Vegas these days is VIP baccarat being played by mostly Asian, and mainland Chinese gamblers. I suppose that is all money “laundering” as well, according to this article?

For every RMB that is swapped for a HKD in Macau, someone in China had to take and accept that RMB in China, there is no net movement of currency. Where is the alleged "fleeing" of funds then?

Anyway, let’s see the reporter write a follow up with facts and examples, not this racist drivel.

You are overreacting a bit, and your use of the term "racist" is completely off (do only Americans know what this word means?).

What this article is saying is that you can go to Macau with your RMB, turn it into chips, and then turn the chips into HK$ without having gambled anything. That is in effect laundering money because apparently China limits the amount of money one can take out of the country and no such limits exist for HK$.

Consequently, your entire analysis is entirely off. And please look up the definition of racist before using that word again.

Kotau to Economist, applaud to this article to mention the corruption and gambling in Macau.

I have been travelling around the world for my own business, I have been in Las Vegas, Singapore, Macau, Hong Kong, etc…. let me added a few of my observations:

This article said “Gaming revenues in the first 11 months of the year were 44% higher than in 2010; Macau is now four times bigger than Las Vegas. The former Portuguese colony, a “special administrative region” of China since 1999, is now the world’s gambling capital.”

This is true, 5 years ago; Las Vegas gambling is bigger than Macau. Now Macau is 4 times bigger than Las Vegas. In Russia, Burma, Vietnam, Singapore, even in North Korea and all around the Chinese boarder, there are gambling casinos opening every month, tailored to corrupted Chinese government officials. All you need to do is just walk over the Chinese boarder, you will see huge casino, speaking Chinese, use Chinese RMB…..

This article also said “A government official who has embezzled state funds, for example, may arrange to gamble in Macau through a junket. When he arrives, his chips are waiting for him. When he cashes out, his winnings are paid in Hong Kong dollars, which he can stash in a bank in Hong Kong or take farther afield”.

Again, this is true. When I was in Singapore, a personal friend told me a daughter of a government official, lost 200,000 RMB in a casino in one night. There are many way RMB can be moved to outside the Chinese boarder; I met a person, he told me he can transfer one million US dollar within 24 hours to any country, he can transfer any amount of money, if he has few days. The ‘buy rate’ and ‘sell rate’ are better than the government owned banks.

Your article is correct one more time, you said “According to the Hurun Report, a wealth researcher, some 14% of rich Chinese say they have already left the country or are filling out paperwork to obtain a foreign passport. Another 46% are considering one of these steps.”

This is another true statement. All you need to do is looking around the expensive neighborhood in the western countries. They buy multi-million dollar house in cash. I think more than 90% of the rich people are family members of government officials, they want to take as much money as they can while in office, setup another residence in western country to escape, if needed.

I sincerely wish the Chinese government cleanup the corruption in China. Chinese government should publish the incomes and assets of all government officials and their family, how they made the money. Have a web site for ordinary citizen to report corruption will be helpful too. I met dozens of officials, who spends money way beyond their income, have assets in the millions, tens of millions….

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@ Jon Macau

Of Course--- after 200 years of brain-washing that they are superior--- White Supremachists can never accept that Macau can ever do better than Las Vegas--- without something sinister going on

Anything positive about China will be immediately shot down --- with reflex action as something quite impossible--- "what:China can do well without something fishy --- impossible ..."

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"China is the best nation on the globe~"

How many other countires have you lived in?

China is the best nation on the globe~

Reading this I cannot help to think about all the people who produced this wealth. They worked long days, 6 in a row, for a minimal wage to create real value sold at low prices. This has nothing to do with fairness but is in the focus of the economist without any reflection. Mind you that European politics is going to the thirties adagio, cut spending. The world is heading for trouble.

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@ rep3

You are 100% correct

And even though there are no casinos in India--- the billions of $$$$ of corrupt India monies manage to find their way to Switzerland and USA -- year after year

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@east_wind

"@ Jon Macau

Of Course--- after 200 years of brain-washing that they are superior--- White Supremachists can never accept that Macau can ever do better than Las Vegas--- without something sinister going on

Anything positive about China will be immediately shot down --- with reflex action as something quite impossible--- "what:China can do well without something fishy --- impossible ..."

Your gems of wisdom astound everybody. If casinos were such a good thing, why doesn't the PRC legalize gambling in China.

In 38 years, the Basic law expires and Macau will merge with China. Chinese laws will be enforced etc. Expanding Casinos makes the gap even wider. Of course you are going to say Mao endorsed Casinos, and all the other facts you create out of thin air.

I'd always assumed there had to be more to the success of Macau than the Chinese love of gambling. Its all very reminiscent of James Clavell's Noble House.

The CCP is wasting its money paying you 50 cent posters to spew unfounded claims of Chinese greatness. They should require that you learn logic and debate as well as English if they want to get their money's worth.

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@ Bismarck

Nobody ---including you can see what will happen in 38 years time

Just as 38 years ago---nobody would have dared to say that there would be billionaires in China today --- that there would be people driving Ferarris and BMWs in China

So -- STOP LYING

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You said and I quote:

"How about the reporter attempting to describe how the money is supposedly “laundered?”

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Let me tell you some of the ways money is laundered:

Few years ago, someone approached me and said when I imported products from China, I reported less than the actual price, so I keep part of the revenue in US dollar. I give him the US dollar in U.S. and he give me Chinese RMB in China. The 'buy and 'sell' rate are better than banks offered. He said he can transfer one million dollar within 24 hours, he will wire transfer the money to my Chinese account, after I verified the money is actually in my Chinese account, then I give him the U.S. dollar. He gave me several references and that is how he makes his money by making less than the government exchange rate.

Believe it or not, I refused his proposal and I did not do it.

I know someone, by investing/opening a factory in China, he can move huge amount of money back and forth.

Another way I hear is become a friend of a big wheel in one of the Chinese banks.

'MONEY IS NERVOUS IN CHINA"...can't be far from the truth when the incoming fdi alone dwarfs the total macau earnings in a year (we all know that the odds are stacked in casino's favor) and if we were to assume that patrons win 50% of the total revenues (being generous) and the other 50% by casinos, then the [patron's total earnings would be 23.5 billion. peanuts in so-called "laundering" as compared to the total income of china (around 6 trillion).
just simple hogwash...TE comes up with articles every week to discredit china in one space or the other

There is a good reason why central government turns a blind eye on Macau. As long as there is corruption that money will need to find a way from Bank of China into some Swiss account. Better that it be done on Chinese soil then in Vegas.

Everyone has some dirty laundry. So China has its fair share.

Money laundering with Chinese characteristics!
"I am not amused" Chairman Mao

Are there "boarders" (boarding rooms with attached casinos and massage parlours) at Chinese borders with Burma, Vietnam, etc.? Nice!

“A government official who has embezzled state funds, for example, may arrange to gamble in Macau through a junket. When he arrives, his chips are waiting for him. When he cashes out, his winnings are paid in Hong Kong dollars, which he can stash in a bank in Hong Kong or take farther afield.” As for this, no matter how harsh the horn of acute punishment from the senior management in Beijing, still a large number of powerful officials come in and go out without restriction. It comes always like this, the government tend to bring beneficial policies to the mass public, however, the actions were comprehensively "cut this, cut that", as a whole! Just like the case of Lai Changxing, who finally were extradited from Canada, he had far ahead been informed of the news that there would be trouble for him, then he fled through Hong Kong at ease and equilibrium. The policy carried by the CCP, on the contrary, harmful and painful enough for the publicity, but the seniors and the ones who are hidden in big daddies' pocket? They look in numb, act brutally, press the legislators. Macau is worth for its subsistence, at the least, a mirror of how severe the corruption in mainland China.

Everytime the Western media and/or politicians comment about China, they use the words "nervous", "corrupt"... If they're so darn knowledgeable, they would have prevented all the current crisis in the West. Stop mouthing so-called "values" and "freedom" like a stupid parrot! They wouldn't dare venture into their own inner-cities during daytime, for crying loud!

Go talk to a psychologist, all the character assassinations only shows the West's own insecurity, BIG TIME! All those hopes for China Springs and "imminent" economic collapses are just wishful thinkings from some racist or jealous folks.

China and all those countries deemed "enemy du jour" have their problems. Their major problem is they don't have the resources to support huge propaganda machine like the Western media who relentlessly backmouthing those who don't kowtow to the West!

Stanley Ho had a monopoly till 2002 and still own basically one half of all the casinos in Macau.