China again threatens gambling tourism, adding to Covid pain

Tuesday 26th of January 2021

China is showing no sign of letting up its campaign against overseas gambling, announcing it’s expanding its blacklist of countries that target Mainland Chinese for gambling purposes.

The state-run Xinhua news agency said the Ministry of Culture and Tourism (MCT), in conjunction with relevant departments, will make a list of the second batch of overseas destinations that attract Chinese tourists for gambling activities, which will be subsequently added to the system.

Beijing last August announced the blacklist and said that travel restrictions would be imposed on Chinese citizens heading to overseas cities and scenic areas on the list.

However, the list has not been formally published leaving analysts guessing as to the main targets of China’s ire. Similarly no names have been mentioned in the expanded list of countries.

For the first round, analysts suggested the main targets were likely to be countries in Southeast Asia. J.P. Morgan suggested the Philippines, Cambodia and Vietnam were likely to be in the cross hairs and to a lesser extent South Korea and Australia.

However, the majority of integrated resorts in the region have developed their tourism offering with one eye on the China VIP market.

Macau, a regulated market technically considered part of China, was seen as being exempt from the restrictions.

State-run media has said the bans were put in place to better regulate the tourism market and safeguard the lives and property of Chinese citizens. However, the more problematic issue is seen as capital outflow from the country.

Over the past year, Beijing has stepped up its rhetoric against the capital outflow blamed on overseas gambling, calling it a major security risk.

At a conference last year in Beijing, the Ministry of Public Security’s International Cooperation Department Director-General Liao Jinrong said about RMB1 trillion (US$145 billion) in gambling funds flow out of China each year, “There are so many casinos overseas, and details of the assets of many domestic entrepreneurs, individuals, and related parties would have been investigated thoroughly…This is very unsafe for us.” Liao added that Beijing needed to “severely crack down in accordance with the law.”

Figures suggest it has been doing just that. The Chinese government earlier this month said it had cracked 3,500 cases of illegal cross-border gambling in 2020, arresting 75,000 suspects. It also shut down 1,960 illegal payment platforms.

Although Beijing’s measures are more likely to be targeted at the VIP market and the junkets organizing VIP travel, the renewed sabre rattling couldn’t have come at a worse time for Asia’s struggling integrated resorts.

Although overseas borders are mostly shut, Mainland Chinese were still thought to have a strong desire to travel. Concerns over being targeted for gambling may have a strong influence on where they go once they do eventually resume movement.