Gamblers use machines for ready cash
Morgan Stanley analysts Praveen Choudhary and Jeremy An have reassuring words for Macau investors and operators concerned about the removal of UnionPay cash withdrawal machines from casino pawnshops.
Worry about the government action “is overblown in our view,” the team said in a note. “Historical efforts by central banks and monetary authorities (such as reducing the daily and annual ATM withdrawal limit, connecting ATM cards to IDs and implementation of facial recognition) have had minimal impact on GGR, while making the industry structure much more robust and sustainable in the long term. We expect this to be similar.”
They noted that for the whole industry, 23 percent of gross gaming revenues and 32 percent of EBITDA come from the premium-mass segment. “However, not all of them need cash from pawnshops and the impact should be minimal and for a short period,” the analysts said.
Recently a number of point-of-sale terminals were removed from pawnshops located inside Cotai integrated resorts. The Monetary Authority of Macao then issued a warning that merchants risk losing their “business relationship” with local banks if they allow unfettered use of the machines by gamblers looking for cash back, reported Inside Asian Gaming.
A 2014 Reuters investigation found that many Mainland Chinese used UnionPay cards to sidestep cash withdrawal limits of 20,000 yuan (US$3,200) a day, often using that money to gamble. The Monetary Authority said banks needed to undertake “ongoing monitoring of the merchants” to prevent the use of point-of-sales machines “to conduct illegal activities.”
The recent crackdown is part of an ongoing effort by China to curb illicit capital outflows.
