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MACAU, CRIME, AND REGULATION

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. THE GOD OF GAMBLERS (excerpt).

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MACAU, CRIME, AND REGULATION

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  1. 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

  2. THE GOD OF GAMBLERS (excerpt) http://www.youtube.com/watch?v=IJMdPb0iMM4

  3. 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

  4. THE VIP SEGMENT AS A PROPORTION OF MACAU’S TOTAL CASINO GAMING REVENUE

  5. MACAU GROSS GAMING REVENUES (HK$) Note: US$1 = HK$7.75

  6. MACAO VISITOR ARRIVALS BY COUNTRY OF ORIGIN • Importance of the Individual Visitor Scheme from China, 2003

  7. COMMERCIAL SEX IN MACAU • http://www.youtube.com/watch?feature=fvwp&v=8Buq74tLo3Y&NR=1 • http://www.youtube.com/watch?v=WPe9SXxEz6I&NR=1

  8. LOAN SHARKING • http://www.youtube.com/watch?v=Uixz214-Cok • http://www.youtube.com/watch?v=CDMZH6WZV98&feature=related

  9. 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

  10. 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

  11. 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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