Japan’s VIP challenge

VIP play had been projected to be a major segment of the potential overall Japanese gaming market, but a lot has changed since the law permitting integrated resorts was passed in 2018.

1.     The Gaming Inspection and Coordination Bureau (“DICJ”), the Macau gaming regulator, introduced a number of initiatives to strengthen gaming regulation. One required that all new Macau junket licensees from 2015 provide full disclosure of shareholders, investors and key employees.
2.     In December 2016 new controls were imposed on the amount of cash individuals using China-issued ATM cards could withdraw from ATM machines in Macau.
3.     Facial recognition technology and ID verification for cash withdrawals was deployed In May 2017 at ATMs in and around casinos and then extended to all ATMs in Macau.
4.     China’s State Administration of Foreign Exchange announced that as of 1 September 2017 information would be collected on overseas transactions exceeding RMB1,000 (US$147).
5.     In May 2016 the DICJ banned proxy betting in Macau’s casinos and required casinos and junket operators to follow significantly stricter AML protocols.
6.     The DICJ banned junket operators, with effect from 1 August 2019, from using Macau casino and VIP rooms as a base for cross-border settlement of VIP gambling services provided outside of Macau.
7.     The DICJ also stated that any violation of local laws, or even of regulations in places outside Macau, could potentially affect the suitability of a junket operator in Macau.
8.     Since the start of the Covid-19 pandemic, the Chinese government has stopped financial outflows by keeping its citizens from traveling overseas, thus ensuring a boost to the domestic economy.
9.     In June 2020 the People’s Bank of China began tracking large-sum domestic cash transactions in an attempt to curb illegal transactions and make the movement of money even more difficult for junket and underground banking operators. 
10. Around the same time, Chinese authorities arrested thousands of people suspected of being involved in cross-border gambling and there have been many official pronouncements against online gaming and those involved, as well as firms providing payment services to these entities.
11. China’s Ministry of Culture and Tourism established a “blacklist” of overseas tourist destinations in August 2020 that are targeting mainland Chinese customers for gambling purposes.  
12. The Chinese government announced in December 2020 that the National People’s Congress had passed an amendment to Chinese criminal law so that, with effect from 1 March 2021, it became a criminal act punishable by a prison term of up to 10 years for any person or entity (such as an offshore casino) organizing or soliciting Chinese citizens to gamble overseas, while the penalties for serious breaches have also been increased.