Why was Alvin Chau Arrested in Macau ?

Macau, one of the world's ‘gambling meccas,’ isn’t short of its own controversies. Late last year, Alvin Chau, former Chairman and Executive Director of Suncity Group Holdings, was arrested. Authorities believe that the 47-year-old businessman was operating an illegal syndicate that could harm the world’s biggest gambling market.

Alvin Chau’s Detention

Before his arrest and detention in late November last year, Alvin Chau was the Chairman and Executive Director of Summit Ascent Holdings and Suncity Group Holdings. The junket mogul was among the eleven separately arrested by Wenzhou Public Security Bureau (PSB) for being a member of criminal organizations, facilitating money laundering, and promoting illegal gambling operations.

According to the police statement, Chau had a casino junket set up in Macau back in 2007. In addition, he runs multiple online casinos in the Philippines. The police also said that the businessman’s investments currently have over 80,000 gamblers and 12,000 gambling agents.

But what’s the main reason for his arrest? After two years of investigations, Chau was implicated in hiring mainlanders as shareholders and participating in cross-border betting activities. Even worse, Chau is accused of running underground banking services and facilitating cross-border money transactions.

Potential Punishment for Alvin Chau

According to Macau’s legal system, Chau and other suspects are not guilty of any crime until proven otherwise by the courts. Also, the suspects will be charged by the Public Prosecution instead of the Wenzhou Police.

Meanwhile, prosecutors claim that Chau made his billions by allowing wealthy mainlanders to participate in cross-border and offshore gambling in China. These activities are illegal in China, although the autonomous region formulates its own gambling laws.

According to a statement by the local government, the current laws on junket operations are relatively “perfect.” However, the authority stressed the need to strengthen the existing laws to effectively supervise gaming operators in the region. Currently, public consultations are ongoing regarding the amendment of gambling laws in Macau.

Current State of Gambling in China

Keen followers of gambling news are not new to the fact that China is rushing to regulate its gambling market. The aim is to prevent illegal gambling and rake in revenues for the government.

As expected, Macau was the first administrative region in China to pass gambling laws, with the remaining regions likely to follow suit soon. Although the rules are stringent, there is still a lot to be done if the Chinese gambling market is to be on par with Europe.

In Mainland China, for example, it’s illegal to participate in any form of gambling, including online gambling. Even gambling in the best offshore casinos isn’t allowed, with the ruling party banning all foreign operators from accepting Chinese players. Breaking this law can lead to up to 3 years behind bars.

But interestingly, China passed a law in 2017 to allow Philippine gaming operators in the country. This opened up room for online casinos in the country, with many Chinese nationals moving to the Philippines to operate these gambling sites. So, it was a win-win deal for both countries.

Something About Licensed Gaming Junkets

So, who exactly are junket operators in Macau? These are “gaming promoters” who run VIP gaming rooms on behalf of Macau licensed casino operators. Junkets are approved by the DICJ (Gaming Inspection and Coordination Bureau) and reportedly employ thousands in Macau. So, in short, junkets are legal casino intermediaries for offering high-roller services.

Following Chau’s arrest, Suncity’s spokesperson quickly reacted by claiming that all junkets in the region operate under the defined gambling laws. But the damage was already done for Mr. Chau, as international news station, Reuters, reported that Suncity Group Holdings was not listed in junket operations.

The arrest further damages the image of junkets in Macau who have been accused of facilitating money laundering for the rich in Mainland China. Even the UN couldn’t resist commenting on the matter by saying that this should be a tell-tale sign for the junket industry.

Better and Cleaner Gambling Environment in Macau

After this incident, the Macau casino stocks were rattled. Shares in Wynn Macau plunged by 7.8%, with MGM China losing even more at 10%. The investors expressed their fears about the hardline stance taken by the authorities towards the sector. The famous junket operator brought high rollers to Macau from Mainland China, extended them credit, and collected their debts.

But overall, the stricter stance is part of the broader strategy by the government to control illegal betting in China. Depending on how you decide to look at it, this is good news for operators and players, as the industry will be safer to operate in. Remember that before COVID-19, Macau’s government collected an impressive 80% of its revenue from the betting industry. Now this means the industry can only get bigger and better.