Watershed moment in Macau gaming

The high-profile arrest of Macau's junket mogul has sent chills down the spine of the enclave's gaming sector.

An outstanding question is whether the clampdown officially initiated by the local authority of a mainland city will be short-term - like what happened before in "Asia's Las Vegas" - or it is going to be lasting, with the impact not yet fully appreciated.

Macau's casino licenses are all up for renewal next year and, prior to that, the government there had been speaking about a plan to introduce tighter regulation and supervision together with a 45-day policy consultation on the sector.

The arrest of Alvin Chau Cheok-wa has made headlines not only in mainstream newspapers but also on social media.

The huge amount of attention is partly due to the colorful life of the mogul, who founded and runs Suncity Group, arguably Macau's biggest junket operator that brings in players to casino tables that are open only to big spenders.

A Macau-based gaming consultant reportedly estimated that prior to the pandemic junket revenues accounted for about half of the gaming revenues overall and Chau's Suncity was so successful that it alone was responsible for over 50 percent of the junket revenues.

In other words, Suncity accounted for a quarter of Macau's gaming revenues prior to pandemic.

Had it not been due to the lockdowns, the downfall of Chau's group would have had a major impact on the operation of the casinos immediately. The lockdowns, it could be said, reduced the impact to a negligible level.

Despite this, the crackdown currently focused on Chau and his empire may last longer than thought in view of the hard lines pursued by President Xi Jinping in other economic sectors - from technology to education, property and entertainment.

The effects of those other crackdowns are still being felt nowadays. For example, Alibaba shares yesterday closed at a record low of HK$130.

The junket mogul was first placed in the cross hairs by the Wenzhou public security bureau in Eastern China which issued an arrest warrant on Friday. He was accused of promoting cross-border gambling activities for mainlanders. The next day, Macau police swooped down to arrest 11 people and Chau was believed to be one of them. They were arrested over alleged links to cross-border gambling and money laundering.

The offenses cited by Wenzhou and Macau weren't the same. Chau was reported to have confessed to operating gambling platforms in some Asia countries but denied other accusations, including money laundering.

Looming ahead can be a legal battle.

Meanwhile, state media Global Times' identifying Chau as the head of a cross-border gambling "criminal syndicate" - with over 12,000 gaming agents and 80,000 members across the mainland - could mean further implications.

Yesterday, all Macau casino stocks slid. Shares in MGM China tumbled 10 percent, Wynn Macau was down 7.8 percent and Sands China shed 5.3 percent.

What happened over the weekend in Macau may well be a watershed with far-reaching implications for its gaming industry.