Mainlanders' Preferred ATMs

Almost all bank account holders in China use UnionPay ATM cards

Macau was told to clamp down on excessive cash withdrawals by mainlanders from ATM machines, and in May apparently installed facial recognition technology for security reasons.

That scared them off in Macau, but this has resulted in more mainlanders going to Hong Kong to withdraw cash using their UnionPay bank cards.

ATM withdrawals in Macau have decreased dramatically

When the media asked the Hong Kong Monetary Authority about how big the impact was on the local banking system, the monetary chiefs refused to confirm or deny there was a surge.

However they do know by how much because the authority has instructed local banks to submit data on cash withdrawals by UnionPay cards through the ATM network -- both the volume and the timing of the withdrawals.

But the HKMA just doesn't want to comment, saying: "We are not in a position to comment on any dialogues of a supervisory nature".

Macau ATMs now use facial recognition technology

The spokesman even added there are no plans to install facial recognition technology in ATMs. Good for us to know.

Currently mainlanders can withdraw up to 100,000 yuan (US$15,000) in cash overseas and remit up to US$50,000 worth of foreign currency offshore annually.

Those who use UnionPay cards (which is practically everyone who has a bank account in China), can withdraw up to 10,000 yuan per day for each card they have.

As a result they open as many bank accounts as they can to be able to withdraw tens of thousands of yuan per day.

Mainlanders now prefer to withdraw cash from Hong Kong

And now Hong Kong is the preferred city to get their gobs of cash out before they hit the casinos. It's good to know the city is still relevant to mainlanders... they may not want to shop here anymore, but at least we're a convenient ATM for them...

Reversal of Fortune?

Steve Wynn unveils four Qing Dynasty vases with then CE Edmund Ho

In July 2011, casino magnate Steve Wynn purchased four rare porcelain baluster vases from the Qing Dynasty at Christie's auction in London for $12.8 million, several times more than the pre-sale estimate.

He has said that he is committed to returning Chinese treasures back to China, and this quartet of vases was donated to the Macau Special Administrative Region, where they are in a permanent collection of the Cultural Affairs Bureau's Macao Museum.

Looking back, the PR stunt seems to have been Wynn's attempt at cultivating guanxi with the mainland in the hopes it would lead to even better business in the future.

Stanley Ho with the horse's head he bought at auction in 2007

That's what Stanley Ho did too when he repatriated two animal heads that were looted from the Summer Palace in the 1800s. Ho purchased the boar's head in 2003 from a New York collector and donated it to China, and again the horse's head in 2007 from a private collection in Taiwan.

But having spent millions of dollars, what has come of it?

Instead of hoping for the investment -- oops repatriation of treasures -- to pay off, things have gone south in a really bad way.

Chinese President Xi Jinping continues to wage his battle against corruption and has not only settled his sights on gambling tables in Macau -- but worldwide.

"Some foreign countries see our nation as an enormous market, as we have investigated a series of cases," said Hua Jingfeng, a deputy bureau chief at the Ministry of Public Security. "A fair number of neighbouring countries have casinos, as they have set up offices in China to attract and drum up interest from Chinese citizens to go abroad and gamble. This will also be an area that we will crack down on."

Can we hear the pin drop in Macau, Manila, Singapore and Las Vegas?

Not only is the Chinese government cracking down on gamblers, but also the casinos trying to promote themselves. The authorities will make it harder for these "resorts" to advertise from billboards to print and even text messages.

Construction continues at Wynn Palace, phase two at Cotai

There will also be further restrictions on visa requirements, and the flow of money will be tracked by officials through UnionPay, the only domestic credit card in China.

Gambling revenues in Macau have dropped for the first time since foreign operators were allowed into the former Portuguese colony in 2002. In December alone gaming revenues plunged 30 percent.

The anti-corruption crackdown has scared the high rollers, who depended on junkets to not only get them to Macau, but also supply a steady stream of credit. Some 16 percent of junket operators shut down last year, some carrying debts.

Did Wynn know this was coming? If there were any signs, he didn't see them at all.

"China remains a big question mark. We have more questions than answers," he admitted during a conference call earlier this month. "Thousands of our Macau employees are anticipating promotion and a better life because of Wynn Palace... We have learned in the last 12 years to behave in China, and that is to listen carefully to what the leadership says and to conform with the program as we are their guest," Wynn said. "We wait for an announcement from the government with baited breath... What we are seeing in China is an entrenchment."

Wynn could only say that he hoped "our ambitions to grow in Macau will continue to develop".

Does that sound like cautious optimism or completely blindsided?

So much for the vases and the animal heads. Millions of dollars do not buy security.

While the big gamblers are barely trickling in these days, casino operators in Macau are now wondering if their $23 billion investment in their second phases to expand gambling tables and entertainment options will pay off now...

Macau's Reversal of Fortune?

Chief Executive Fernando Chui and Chinese President Xi Jinping have a toast

Today Chinese President Xi Jinping marked the 15th anniversary of the handover of Macau back to the motherland, but it may also signal the end of its free-wheeling days.

In his speech, Xi called on the Macanese government to find "greater courage and wisdom" to "strengthen and improve regulation and supervision over the gaming industry".

Seems the President is expanding his anti-corruption campaign to Macau, but is Chief Executive Fernando Chui Sai-on the best person to deal with this? He doesn't seem to have a good grip on how discontented the Macanese are with his leadership, or rather his lack of authority.

Chui now has to come up with a concrete plan to shift Macau's economic model from one that currently sees more than 85 percent of taxes coming from casinos. When asked how he would go about doing this, he responded the government would "undertake a review" of the casino industry in spring of next year, ie the earliest would be after Chinese New Year.

Macau's dependency on gambling will have to change

In the last few weeks, Macau's casino takings have sharply fallen due to the anti-corruption campaign as well as the economic slowdown on the mainland.

China will also launch a crackdown on the flow of illicit funds through casinos, overseen by the Ministry of Public Security. This also means VIP junket operators, who bring in high rollers and arrange financial credit for them, will be closely monitored.

Many gamblers transfer funds through their UnionPay ATM and credit cards, and the security  ministry's Economic Crimes Investigation Bureau will be watching for suspicious transactions...

Xi also mentioned resisting "foreign interference", which could mean targeting specific casino operators who may have angered Beijing. Wonder who is on this hit list?

In the meantime, can someone please explain to Xi that it's not the casino operators' fault, but his own citizens who have this incredible urge to gamble?

These casino operators have tried desperately to diversify entertainment with shopping and shows, but mainland visitors aren't interested in fine dining restaurants, historic landmarks or entertainment -- they just want to have fun by throwing down wads of cash on the slim chance of winning big.

The other big question is, casino operators are currently spending millions building their next phases to incorporate more entertainment as well as gambling tables. Can they afford to have mainland visitors drop to a trickle?

Xi's edict also reveals Chui has not been an effective leader at all -- something the Macanese have known all along. But is Chui the man to fix things with an iron fist? Issues like housing and transportation are crying out for attention, but the government has been too busy counting money to tackle these problems.

Perhaps one good thing that may come out of Xi's anti-corruption campaign in Macau will be that the city will be cleared out of mainlanders and then Hong Kong people can enjoy it again without having to fight the crowds!

Attempting to Stem the Flow

UnionPay is China's popular form of bank payment that has spread to casinos

Perhaps it was going to happen sooner or later, but after the reports of Macau's casinos taking in even more money than before, Beijing is cracking down on funds being illegally transferred to the former Portuguese enclave.

China's state-backed bank payment card UnionPay has announced a series of measures to "combat overseas money laundering, capital flight and other illegal bank card use" in Macau.

At the heart of the issue are the illegal hand-held payment devices that are used in and around the casinos for gamblers to access money back home. Analysts say the amount could be more than 40 billion yuan last year.

Casinos have made lots of money from UnionPay payments

Mobile UnionPay payment devices have illegally entered Macau and used for unauthorized dealings that look like domestic transactions, thereby circumventing currency controls.

By using these devices the users can also evade tax on the mainland, which is why authorization is needed.

While Macau police have orchestrated a few raids in recent months, seizing payment devices and cash, it has hardly made a dent into the amount of money flowing into the casino city.

"the growth in payment cards is huge, because of China's corruption crackdown. Mainland gamblers in Macau don't want to reveal how much they gamble, so they use cards," said one analyst. This could mean gambling revenue figures are under-reported.

The official amount is $45 billion last year, but the analyst thinks a further $90 billion was unreported.

Interestingly, if pawnbrokers are not part of this UnionPay device circuit, then they are losing out, as some 200 billion yuan in transactions are conducted through UnionPay cards in the pawnshop industry, about 20 percent of them through these mobile devices.

Traditionally gamblers who were in the red would pawn off their valuables, but now they just had to swipe their card and input a PIN number.

What happens in the next few months will be interesting to watch -- will the torrent of yuan barreling into Macau halt to a trickle? Or will gamblers and their Macau enablers find some other way to carry the billions of yuan over to play on the tables?