Lawsuit Causes Media to Focus on Macau’s Junket Operators and the Chinese Triads

The lawsuit against the Las Vegas Sands Corporation by former Sands Macau CEO Steve Jacobs has focused new attention on the gambling operations of U.S.-based companies in Macau. As a result, the UK-based newspaper, The Guardian, and the Investigative Reporting Program of UC Berkeley launched their own investigation into the casino gaming operations in China.

The report focused closely on the Sands Corporation’s operations and practices, though it discussed the intersection between the casinos, junket operators, and Chinese triads in general. Though the Guardian went out of its way to note that no one accuses the Sands of having dealings with the triads, it did focus heavily on the shadow economy of Macau and the great lengths the Sands Corporation has had to go to in order to limit its connections with Chinese organized crime. The article shows the pitfalls of operating casinos in Macau and the many hoops US gaming companies must jump through.

VIP High Rollers Gone

The crux of the report is that the bulk of Macau casino’s revenues come from VIP high rollers. Those high rollers are recruited from all over East Asia by the junket operators, who for the last ten years have served a key role in generating revenues for the casinos.

Asian Junket Operators

Chinese laws assure that most people visiting Macau cannot carry more than $3,500 to the island on a visit–and no more than $50,000 per year to the Macau. The idea of that law is to assure that high roller gambling does not take place. Instead, retail customers, perhaps better known as low rollers or mass market gamblers, are supposed to be the lifeblood of Macau’s gambling culture. They are not, or haven’t been for the bulk of Macau’s history.

To get around the laws, junket operators offer credit to Chinese high rollers. The high rollers borrow big money from the junket operators while in Macau, and those operators pay the Macau casinos for those players’ gambling up-front. When those gamblers get back to the Chinese mainland, they settle up with the junket operators.

Collecting Gambling Debts

That system would work just fine, except Chinese law does not allow the junket operators to sue to get back gambling debts. The government simply does not recognize gambling debts the way U.S. or U.K. courts do (they view markers as IOUs which must be paid).

Because no such protections exist for the junket operators, those operators have to turn to the triads to collect the debts. The Globe leaves it in no uncertain terms that debt collections sometimes involve violence. Usually, the triads simply follow and harrass the debtors until those people pay up. Because they’re dealing with high rollers, they often have to put a lot of people on the job, in order to assure they can intimidate a man with 10 or more bodyguards. Sometimes, they turn to violence.

Triads Controlling the Junkets

Over time, the connection between the junket operators and the triads has narrowed. For instance, Paul Phua, the defendant in the Caesars Palace sports betting trial in Las Vegas, was a successful junket operator thought to have ties to the 14K Triad. Charles Heung, the Chinese actor turned director during movie mogul and financier and junket operator, is thought to be a higher-up in the Sun Yee On Triad. In fact, Heung’s father is known to have founded Sun Yee On in 1919 (something Heung admits, while denying any connection himself).

Charles Heung and Sun Yee On

Though Charles Heung has never been arrested or tried for his connections to organized crime, Kwong Wing Wong testified in a New York racketeering trial in 2013 that Charles Heung and his 4 brothers were “the top guys, the biggest” leaders of the Sun Yee On Triad. Kwong Wing Wong said he had been an enforcer for the crime syndicate, saying, “I wounded people who are using knife, and gambling house.”

The US Department of Homeland Security has Heung listed as having an “affiliation with Asian organised crime. Heung’s wife, the politically-connected Tiffany Chen, is listed as “the spouse of an Asian organised crime figure”. For that reason, Charles Heung cannot enter the United States. Yet he was in business with American corporations in Macau for some years, as a junket operator.

It is Charles Heung junkets which are detailed in the Globe Article. Heung operated junket gaming in the Sands Macau Casino for years. In fact, his people organized games inside the casino, in private rooms set off from the main gaming area. The junket operators organized these games themselves in many cases, paying the casinos a portion of their winnings. In this way, a shadow economy existed.

$200 Billion in Undocumented Revenues

In 2013, Macau’s casinos posted $44 billion in revenues. Experts believes the real amount of money generated is closer to $200 billion, with most of that money going to the junket operators–and therefore the triads.

The Las Vegas Sands Corporation has changed its background checking policies in recent years, hiring former FBI employees to maintain a wall between their casino operations and the triads. For that reason, Charles Heung was turned away from the Sands Macau and Venetian Macau and, later, from the gaming company’s casino in Singapore. The times are changing.

While the Steve Jacobs trial has focused the attention of the western media on the Macau gaming industry, it does show that American corporations active in Macau go to greater lengths to avoid trouble than Chinese corporations might. Oversight under the auspices of the Foreign Corrupt Practices Act assures that the Sands Corp, Wynn Resorts, and MGM Resorts take anti-money laundering measures no other operator might. Still, the focus shows how seedy Macau’s casino industry is and how close organized crime is to those operations.

About Cliff Spiller

Cliff Spiller has been an online writer for 14 years. He worked for Small World Marketing for a decade, where he covered topics like gaming, sports, movies, and how-to guides. Since 2014, he has blogged about US and international gambling news on BestOnlineCasinos.com, USPokerSites.com, and LegalUSPokerSites.com

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