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MACAU, CRIME, AND REGULATION TWENTY-FIFTH LECTURE November 27, 2012 William R. Eadington, Ph.D. Professor of Economics, College of Business Director, Institute for the Study of Gambling and Commercial Gaming University of Nevada, Reno www.unr.edu/gaming
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http://www.youtube.com/watch?v=IJMdPb0iMM4 THE GOD OF GAMBLERS (excerpt)
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OPERATING CHARACTERISTICS OF VIP ROOMS IN MACAU Junket operators bring customers from Mainland China –Initially Hong Kong and Taiwan, but China since 2003 –Junket operators are outside regulatory structure Revenue share based on Rolling Chip sales –Mechanics similar to non-negotiable chips in the US Under monopoly, roughly 1/3, 1/3, 1/3 revenue split Under competition, it has moved to 50%, 40% and 10% –Bargaining Power, Cutthroat Competition; the role of AMAX –Revenue rich, profit poor => Financial challenge especially for Las Vegas Sands –Revenue growth has made the market profitable in spite of the split
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THE VIP SEGMENT AS A PROPORTION OF MACAU’S TOTAL CASINO GAMING REVENUE YearTotal Casino Gaming Revenue (billion, US$) Total Casino Gaming Revenue from VIP segment (billion, US$) Ratio of VIP Revenue to Total Gaming Revenue 20012.261.5970.4% 20022.772.0473.7% 20033.582.7777.4% 20045.163.7272.0% 20055.753.6062.7% 20067.074.5965.0% 200710.366.9667.2%
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Gross revenue from different game types of games of fortune in 2007-2012 Game Types 20072008200920102011 2012 1st Qtr.2nd Qtr.3rd Qtr.4th Qtr.Total Roulette 370693 672783147318193-658 Black Jack 1,9172,2471,9032,2902,712696735746-2,177 VIP Baccarat 55,76273,77279,834135,648196,12652,67852,17551,166-156,019 Baccarat 16,51521,26425,49834,91748,66915,13015,55316,805-47,488 Fantan 1641901741832116556 -177 Cussec 2,7553,0432,8263,5554,7741,3541,3281,398-4,080 Paikao 77544386114262220-68 Mahjong -9273470515752-160 Slot Machines 3,5945,6536,5038,61811,4253,3063,2853,149-9,740 MACAU GROSS GAMING REVENUES (HK$) Note: US$1 = HK$7.75
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Number of gaming tables and slot machines in 2007-2012 Items 20072008200920102011 2012 1st Qtr. 2nd Qtr. 3rd Qtr.4th Qtr. Gaming Tables 4,3754,0174,7704,7915,3025,2425,4985,497- Slot Machines 13,26711,85614,36314,05016,05616,10217,03517,029- Quantity as at period end Number of casinos in Macao in 2007-2012 CONCESSIONAIRES 20072008200920102011 2012 1st Qtr. 2nd Qtr. 3rd Qtr.4th Qtr. S.J.M. 181920 - Galaxy Casino, S.A. 55556666- Venetian Macau, S.A. 23333344- Wynn Resorts (Macau) S.A. 11111111- Melco Crown Jogos (Macau) S.A. 12333333- MGM Grand Paradise, S.A. 11111111-
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MACAO VISITOR ARRIVALS BY COUNTRY OF ORIGIN Country of Origin200720062005200420032002200120001999 PRC 55.1%54.5%55.9%57.2%48.3%36.8%29.2%24.8%22.1% Hong Kong30.3%31.6%30.0%30.3%38.9%44.2%50.6%54.1%56.8% Taiwan5.3%6.5%7.9%7.7%8.6%13.3%14.1%14.3%13.2% Southeast Asian Countries 6.5%5.2%3.9%2.9%2.4%3.4%3.6%3.9%4.3% America1.1%1.0% 0.9%0.7%1.0%1.1%1.2%1.3% Europe1.0%0.9% 0.8%0.7%1.0%1.1%1.3%1.9% Others0.6%0.5% 0.3%0.4% 0.5% 0.6% Total number in million 27.022.018.716.711.911.510.39.27.4 Importance of the Individual Visitor Scheme from China, 2003
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COMMERCIAL SEX IN MACAU http://www.youtube.com/watch?feature=fv wp&v=8Buq74tLo3Y&NR=1http://www.youtube.com/watch?feature=fv wp&v=8Buq74tLo3Y&NR=1 http://www.youtube.com/watch?v=WPe9S XxEz6I&NR=1http://www.youtube.com/watch?v=WPe9S XxEz6I&NR=1
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LOAN SHARKING http://www.youtube.com/watch?v=Uixz214 -Cokhttp://www.youtube.com/watch?v=Uixz214 -Cok http://www.youtube.com/watch?v=CDMZH 6WZV98&feature=relatedhttp://www.youtube.com/watch?v=CDMZH 6WZV98&feature=related
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UNUSUAL DIMENSIONS OF MACAU GAMING Side Betting: Could increase the volume of actual gaming revenues by a factor of 3 to 6 Credit and debt collection in Mainland China –“Black Box”: Very opaque –Casino operations highly dependent on VIP play and therefore Junket Operators Registration and licensing of Junket Operators
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ORGANIZED CRIME ISSUES 1997-1998: The Triad Wars and “Broken Tooth” Kwok (Wan Kwok-Koi) –To be released from prison on Saturday 12-1-12 2000: Garrison (battalion) of the Peoples’ Liberation Army in Macau 2005 and after: Increasing reliance on Junket Operators –Distinction between SJM and Galaxy v. Wynn, LVS, MGM and Crown Melco
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ALLEGATIONS AGAINST LVS Associated with Junket Operators convicted of “conspiracy to conduct murder for hire” (Cheung) Money laundering and illegal transfers of electronic funds –Casinos are treated as banks with CTRs and Suspicious Activities Reports Bribery of public officials in Macau
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