Foreign casinos hit the Chinese jackpot
Gambling revenues show that flight of cash from the mainland is hard to curb
SAIPAN For evidence of the odds stacked against China's battle to stop the flight of cash battering its currency and draining its reserves, look no further than the tiny Pacific island of Saipan, which has hit the jackpot with a flood of Chinese money at its new casino.
Thousands of miles from the Chinese mainland, the US-administered island of 50,000 people is festooned with signs written in Chinese and packed with Chinese supermarkets, restaurants and karaoke parlours serving the 200,000 Chinese visitors that arrived this year.
Private jets bring big spenders so free with their cash - and US$100 million (S$142.9m) credit lines - that the modest Best Sunshine casino, owned by Hong Kong-listed Imperial Pacific, wildly outperforms the top casinos in Macau, the world's biggest gambling hub.
Best Sunshine's 16 VIP tables can turn over US$3.9 billion a month, while the world's biggest, the Venetian Macao, manages about $2.5 billion per month on 102 VIP tables, and the MGM around $2.9 billion on 161.
"Never have I dealt with so much money in 36 years in casinos," said one executive working in the casino, who could not be named due to company policy.
Back in Beijing, policy makers are trying to keep that money on the mainland.
Capital outflows, both legal and illegal, have dragged the yuan to eight-year lows this year, prompting China to eat through more than a fifth of its foreign currency reserves since mid-2014 and impose a series of measures to stem the outflows.
Such measures, plus an anti-corruption crackdown that began in early 2014, have dealt a blow to Macau, the self-governing Chinese territory linked to the mainland province of Guangdong.
But whacking the mole in Macau has made it pop up elsewhere, where China's writ doesn't run - in Saipan, the Philippines, Cambodia and Australia.
Manila's Solaire casino registered a 61 per cent increase in VIP turnover in the third quarter, while the number of junket operators bringing in foreign high rollers has more than doubled. Half of its VIP gamblers come from China.
"We have always asked that Chinese citizens leaving the borders respect the laws and rules of relevant countries, and not get involved in gambling or gamble themselves," Chinese foreign ministry spokesman Lu Kang told a daily news briefing in Beijing.
Saipan's government, desperate for revenues after the collapse of its garment industry and a decline in tourism, approved the casino in 2014, overturning longstanding opposition.
It makes it very attractive for the operator, with just 5 per cent gaming tax compared with Macau's 39 per cent, said Mark Brown, Imperial's chief executive, who formerly worked for US casino tycoons.
Not everyone on the island thinks Saipan gets much benefit.
Casino revenues have surged, but the government budget remains less than a sixth of what the casino produces annually, said local resident Glen Hunter, who has fought against the development.
"You have created an entity out here with so much resources and power that I think we will no longer even have a proper functioning democracy," he said. -REUTERS