- Multiple arrests in Macau have caused consternation in the stock market.
- Alvin Chau, head of Suncity Group, is accused of cross-border gambling.
- Suncity is famous for organizing junket tourism for the purposes of gambling.
MACAU - Multiple people have been arrested for alleged money laundering and cross-border gambling in Macau. Alvin Chau, a prominent gambling figure in the autonomous region, is accused of heading a cross-border gambling syndicate, according to Chinese state media outlets.
It was unclear at first if Chau was among the arrests, but speculation ran rampant, and in the stock market, that’s all that is necessary to cause ripple effects.
Stage 1: Consternation
Chau is the chairman of Suncity Group Holdings, one of the largest Macau-based gambling companies.
Chau is also the head of Sun Entertainment Group, which saw almost a 30% decrease in share price after the news broke.
Suncity’s shares were suspended on the Hong Kong Stock Exchange on Monday, but many other Macau gambling organizations saw drops in share price. MGM China’s shares fell 10%, while Sands China dropped 6%, and Wynn Macau dropped 8%.
Stage 2: Confirmation
It has since been confirmed that Chau was among those arrested, with Reuters reporting that he was brought in on Sunday and that a warrant for his arrest was issued not just in Macau, but in mainland China.
Suncity was famous for junket tourism - cross-border trips by those outside Macau to the gambling paradise for the purposes of gambling. Such trips have been estimated to account for around 25% of Macau’s gaming revenue.
Macau is autonomous from China, but China seems to view the promotion of gambling across the border as anathema to the culture it seeks to promote.
Ben Lee, who founded IGamiX, a gambling consultancy firm focused on Macau, portrayed this as an action that is directly targeted at cross-border junket tourism.
"After this, now they know that arranging players to come to Macau, promoting gambling in China, even if it’s a phone call in China, could land them in hot soup,” Lee said, per Reuters.
In the wake of the confirmation of Chau’s arrest, and the seeming connection to junket tourism - which the Macau casino industry relies on - shares in Macau based companies fell even further.
MGM China’s shares have now fallen around 15%, while Sands China shares have fallen 9%, and Wynn Macau shares have dropped 11%.