Casino operators in Macau’s multibillion-dollar gambling market fear that their industry is in danger of being eviscerated if China’s digital yuan is fully implemented across the country.
According to Bloomberg, some operators have already begun diversifying their operations away from Macau or pivoting away from gambling altogether after being approached by regulators to discuss the possibility of integrating their casino operations with the digital yuan.
Digital Yuan Threatens Macau’s Gaming Industry
This has been the case because as a former Portuguese territory that maintains a unique economic status as a Special Administrative Area, Macau has long been the destination for well-heeled Chinese corporate tourists to experience the kind of revelry that is almost entirely unavailable on the Chinese mainland.
Typically, such tourists arrive as part of corporate junket packages and they convert their RMB to HKD, which is then used to pay for gambling chips. HKD and the relative anonymity it offers to Chinese tourists are central to the operation of Macau’s gambling industry.
Now, however, following the successful first phase of trials for the digital yuan, a number of operators say that they have been approached by Macau’s Gaming Inspection and Coordination Bureau to discuss the possibility of replacing HKD with the digital yuan in their casinos.
If implemented, this would mean that Beijing would have full visibility and control over all financial flows in Macau, which has famously lax financial restrictions and has been identified by the U.S. State Department as a money laundering hotspot.
Quoted in Bloomberg, Associate Professor at Macau Polytechnic Institute’s Centre for Gaming and Tourism Studies, Zhou Jinquan, described the potential impact of the digital yuan on gambling in Macau:
If applied widely, the digital yuan will…breach customer privacy and restrict people’s betting amount to the potential conversion cap imposed on the digital yuan to foreign currencies.
Macau’s Operators In Panic
Speaking to Bloomberg, Eric Leong who runs one of Macau’s famous corporate junket services revealed that he has exited the gambling industry and has switched to import and distribution of luxury items and cosmetics.
Explaining why he thinks the CBDC will destroy Macau’s gambling industry if implemented, he said:
Everyone in this industry is trying to survive however they can. If the water is too clean, there’ll be no fish. The big gamblers will go away if casinos need to be that transparent.
On Dec. 2, Galaxy Entertainment Group Ltd, which is one of Macau’s biggest casino operators declined more than 3% on these fears, as the digital yuan continues to record new usage milestones in its two-month-old launch experiment in Shenzhen.
While casino operators fear disruption, others have pointed out that digital yuan implementation in Macau could open it up as a family destination to China’s middle class.