Macau Considering Using China’s Digital Currency for Gambling
The gambling industry in Macau looks set for an overhaul with the gambling regulator considering using digital currency for gambling. Gaming Inspection and Coordination Bureau is looking into using China’s digital version of the Yuan.
News giants Bloomberg broke the news, claiming it heard from several Macau casino operators. The Gaming Inspection and Coordination Bureau fervently denies it is adopting the digital currency for gambling in Macau.
Digital currency is not a new concept. Bitcoin is the biggest digital currency and is worth $25,750 per Bitcoin currently. Bitcoin is a cryptocurrency and its value fluctuates massively. $10,714.39 bought you one Bitcoin (BTC) exactly 12-months ago, for example. One Bitcoin is worth 2.5-times more only a year later. A single Bitcoin weighed in at $4,721.58 in December 2018.
China Embraces Digital Currency; Makes Digital Yuan Legal Tender
The People’s Bank of China looks set to be the first major central bank to issue digital currency. It trialled a digital version of the yuan earlier this year, testing e-wallets and online apps. The bank hopes launching its own digital currency will help keep up with and control an economy that’s rapidly digitising.
Chinese gamblers flock to Macau and convert Chinese yuan into Hong Kong dollars. That or exchange yuan for casino chips which are valued in Hong Kong dollars. The new digital currency puts paid to any conversion, but also allows the Chinese government to keep tabs on its residents’ gambling habits. That second point is the main thinking behind the plan.
China states the digital currency version of the yuan isn’t a cryptocurrency. This means its price doesn’t fluctuate violently like Bitcoin, as an example. The physical yuan is remaining in circulation, even if Chinese people are using less cash these days.
Users start by downloading and creating a wallet on their mobile phone. They load this wallet with digital currency from their bank accounts, much like using an ATM. This wallet is scanned whenever the user wants to spend some money; it is in place of physical cash.
Why Not Use Cryptocurrency?
China banned cryptocurrency exchanges and Initial Coin Offerings (ICO) in 2017. Residents can still trade these currencies, but it’s via a much more restrictive process. Cryptocurrencies provide a way to move money out of China, something the government is strict at preventing.
Furthermore, experts doubt the blockchain used by cryptocurrencies could support China’s large volume of transactions. China’s annual Single’s Day in 2018, a very busy shopping gala similar to Black Friday, highlighted these fears. Payment demand peaked at almost 93,000 transactions per second. The Bitcoin blockchain cannot physically handle this number of simultaneous requests.
Cryptocurrencies are completely anonymous, opening them up to shady characters. Users can exchange vast sums of money for Bitcoin, use that for gambling, and withdraw back to their accounts. It makes money laundering for organised crime outfits very easy indeed. We all know China does not like being kept in the dark, anonymity is not something the country likes.
Junkets Unhappy About The News
The majority of gamblers heading to Macau under their own steam and don’t need to cover their tracks. Others, the well-heeled VIPs, gamble eye-watering sums and won’t want the Chinese government to know about it.
Junkets are the middlemen for these Chinese VIPs. They make it possible to visit Macau relatively anonymously. They help with converting massive sums of money, also.
Eric Leong is a former junket operator. Switching to this digital currency will spell the end of super-rich VIPs playing in Macau Leong claimed.
“Everyone in this industry is trying to survive however they can. There will be no fish if the water is too clean. The big gamblers will go away if casinos need to be that transparent.”
Shares linked to Macau gambling outfits fell after the news broke. Galaxy Entertainment Group shares fell 3%. Suncity Group Holdings Ltd is Macau’s biggest junket operators. Its value fell 2.8%.
China’s Gaming Inspection and Coordination Bureau poured cold water on Bloomberg’s news. It said “the report is not true” but offered no further explanation. The truth lies somewhere in the middle.