Since the RMB became legal tender in Macau the path was opened to use of the digital RMB as well. As the headline of a Bloomberg article states: “China’s Digital Currency Could Reshape Macau’s Gambling Industry.”
MB June 2021 Special Report | Gaming: The road to June 26, 2022
Unexpectedly, a theme emerged in the context of the new public tender, even though it’s not clear, at this point, what its connection to the terms of the future re-tendering might be: the likely addition of China’s digital RMB as legal tender in Macau.
Whether it will be associated with the next contest or not (as is more likely), the introduction of the digital RMB promises to have serious implications for the future of local gaming – and that will end up being directly related to the conditions of the international public tender.
“Enforcing use of the cryptocurrency could devastate casinos. It would allow the government to more closely trace the money movements of high-rolling gamblers, which could cause VIPs to abandon Macao for other countries,” Rich Duprey, one of The Motley Fool’s most well-known chroniclers, wrote last April.
Opinions are divided.
“We view it as a positive,” said Las Vegas Sands Chairman and CEO Rob Goldstein. “We would love to have more cross-border currency. It’s another form of currency. And we shouldn’t only be concerned – our business is not built on money laundering or on a necessary junket profile.
“Some people are concerned; we’re not. We think it’s an additional form of liquidity into the market,” he told analysts during the last earnings call. “We’re looking to focus on the mass customer, premium mass; that’s our bread and butter. That’s who we are and where we want to go in the future, and we can build a business that keeps growing on the back of that.”
Duprey differs, “Although casino executives say they support its adoption, because Beijing won’t allow gamblers to come back to Macau if they can’t get a digital currency imposed, it would also harm the mass market to whom they’ve been catering.”
In Macau, too, there are those who fear what might come next: Zhou Jinquan, associate professor at the Center for Gaming and Tourism Studies at Macau Polytechnic Institute, told Bloomberg last December: “It’ll breach customer privacy and restrict people’s betting amount to the potential cap on conversion to foreign currencies imposed on the digital yuan.”
The headline of this Bloomberg piece left no room for doubt: “China’s Digital Currency Could Reshape Macau’s Gambling Industry.”
In this same news report by Bloomberg, it was announced that the local government has discussed the terms of introducing the digital yuan with casino operators. And even if almost immediately the Gaming Inspection and Coordination Bureau countered, “the use of digitised renminbi in casinos is a false report,” it seems certain something is going on, not least because the Macau Monetary Authority revealed that a preliminary review of the Macau Currency Issuing System had already started, developing the necessary legislative work with the aim of the law to include the use of digital currency.
Last April the Chief Executive gave more details at the Legislative Assembly: the development of digital currency has become a global trend, and that’s why the authorities are studying possible changes to local financial regulations that could allow for the use of the digital RMB currently being trialled in China. Ho also underlined that local authorities are in communication with the People’s Bank of China to study the feasibility of issuing digital currencies in due course.
“We started hearing chatter about the digital RMB grow louder and louder from the middle of last year, with Macau the only place where there was a void. It didn’t make a lot of sense, and it either meant [local authorities] were studying the RMB and were very quiet about it or they had no idea what was planned,” gaming analyst, Ben Lee, told our sister publication Macau News Agency.
For the managing partner of IGamiX Management & Consulting, it is inevitable that the digital yuan will arrive in Macau, “sooner than most people expect,” and with considerable impact on the gaming industry.
“Although Macau has not yet reached this process at this stage, we should follow the pace of the mainland government,” Ho Iat Seng said. “We will keep communicating with the People’s Bank of China and start a feasibility study around launching the digital RMB in Macau. Therefore, we need to add provisions in relevant law to allow for the introduction of digital currencies.”
It seems certain that some will benefit more than others from this change.
Zeng Zhonglu, associate professor at the Centre for Gaming and Tourism Studies at Macau Polytechnic Institute, believes that VIP lounges will suffer a blow to revenues due to the possible implementation of digital currency.
Brokerage Sanford C Bernstein said in a research report that the introduction of the digital yuan could prove particularly beneficial for Macau’s high margin mass and premium mass segments, allowing easier access to money for mainland customers inside Macau’s casinos: “in the context of casinos, this would mean for example being able to buy chips for play directly from the casino cage (or even a table) instantly using (digital) RMB without the need to convert into HKD.” And the elimination of the need for currency conversion from the key Macau customer group (mainland Chinese) “would be advantageous as it would simplify the process and not subject customers to f/x transaction costs. Digital RMB would allow greater government scrutiny and control over money flows, but it would also allow easier money transfer [and] eliminate the need to use intermediaries (like junkets, underground banks or pawnshops).
As far as is publicly known at this time, the digital yuan currently being tested, called e-CNY, would be fully traceable with real-name registration that would allow the government to know every aspect of a citizen’s transactions.