In Macau, Everyone Goes Over the Limit

Pawnshops play the role of banks for mainland gamblers | “There are all kinds of ways to shuffle money out of China”

Vinicy Chan

A pawnshop display in Macau, offering a watch for MOP 3,399,400 — $425,369


Across from casino mogul Stanley Ho’s Grand Lisboa in Macau, flashing neon lights invite cash-strapped gamblers to pawn their Rolexes and other valuables so they can return to the gaming tables. In almost any other city, these “receptacles of misery and distress,” as Charles Dickens termed pawnshops, thrive in times of economic downturn. Not in Macau, where they help fuel a casino business whose revenues are more than six times those of the Las Vegas Strip. The shops enable the mainland Chinese who crowd the gaming tables to sidestep China’s currency controls.

Gambling revenue in the city of 576,000 people will climb 16 percent, to a record $44 billion, this year, Credit Suisse Group estimates. The growth will be driven by ordinary visitors from China as operators try to cut their reliance on high rollers. Unlike VIPs, these gamblers don’t have ready access to casino-linked credit lines. “Unofficial funding channels, such as pawnshops, are likely to gain more importance as the casinos are keen to attract more premium mass gamblers,” says Gabriel Chan, an analyst in Hong Kong for the Zurich-based bank.

To skirt the 20,000 yuan ($3,217) cap on the money they can take out of China, mainland gamblers go to Macau’s pawnshops and pretend to buy expensive goods using their debit or credit cards. “We’ll then refund them in Macau patacas or Hong Kong dollars in cash as if they had decided to sell the goods immediately,” says Ah Keung, a salesman at a pawnshop near Macau’s bustling Avenida Da Amizade. The gambler gets his cash and a debit or credit-card receipt for his “purchase,” but there’s no record of the cash changing hands. The pawnbroker charges a 5 percent to 10 percent commission for the service.

So-called premium mass-market visitors from the mainland spend as much as 500,000 yuan on a trip to Macau’s casinos and place minimum bets of 2,000 yuan per hand, says Karen Tang, a Hong Kong-based analyst at Deutsche Bank. The 20,000 yuan maximum that a tourist can take out is not enough to finance such a spree. Neither is a trip to the ATM: Mainlanders in Macau are limited to ATM withdrawals of 10,000 yuan a day. The average Chinese visitor stays about two nights in Macau, a territory of China that, like Hong Kong, has retained its own currency and legal system since the end of colonial rule.

Macau’s pawnshops, with a 450-year history dating to the Qing dynasty, flourished after the government ended a 40-year gaming monopoly in 2002 and opened the market to foreign operators including Las Vegas Sands and Wynn Resorts. The number of pawnshops in Macau has more than tripled in the past 10 years, to about 170, says Chou Chin-Leong, president of the Macau General Chamber of Pawnbrokers. There are no official figures on their contribution to casino revenue, and Chou declined to provide financial information.

A gambler surnamed Huang from the southern city of Guangzhou, who asked not to be further identified because he was skirting the law, says he once bought 150,000 yuan of watches from a pawnshop, handed the watches back for cash and had the purchase split into three transactions. That way he didn’t have to leave his contact details, which are required if a customer makes a transaction worth more than 100,000 yuan. There are other ways to get cash, too, according to Huang, who says he visits the city once every three or four months and gambles about 100,000 yuan on each trip. In some restaurants, he says, he adds the amount of cash he wants to his bill, which he pays with a debit or credit card. He receives the excess cash as change.

The ease of changing yuan into other currencies, and the commingling of illicit and legitimate money at the casinos, make Macau vulnerable to money laundering, including proceeds from corruption, the U.S. State Department reported last year. “There are all kinds of ways to shuffle money out of China,” says Doug Guthrie, dean of George Washington University School of Business, who specializes in Chinese economic reform, leadership, and governance. “If you come to Hong Kong or Macau, you can exchange renminbi into patacas or Hong Kong dollars pretty easily,” Guthrie says. “By doing so your money can travel anywhere in the world with ease.”

The bottom line Gambling revenue in Macau will reach $44 billion this year, spurred by pawnshops that help mainland gamblers exceed cash limits.


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