Macau Casino Junkets - I Fought the Law and the Law Won

Suncity casino junket leaders sentenced to long imprisonment

The scale of criminality of Macau casino junkets has been clearly shown in the criminal prosecutions against the leaders of the Suncity casino junket in Macau court, where this week 13 people have been found guilty of multiple charges and given long prison sentences.

Alvin Chau, former CEO of Suncity, was found guilty of a leadership role in a criminal organisation, 103 counts of illegal gaming activities in licensed venues (under-the-table betting), 126 counts of illegal gaming activities in licensed venues (under-the-table betting), 54 counts of fraud, 3 counts of attempted fraud, and one count of illegal gaming activities (proxy betting). He was sentenced to 18 years imprisonment.

Chau and six other defendants were also ordered to pay the Macau Government civil compensation of US$833 million due to their illegal activities that caused the loss of levies on the Macau casino gaming revenue between 2014 and 2021, and also pay over US$250 million to gaming operators of the city as compensation for their lost revenue.

Suncity was the largest casino junket operator in Macau and was founded by Alvin Chau Cheok Wa in 2007. Alvin Chau has a long history of operating casino VIP rooms and the related criminal gangs. He is reported to have been a member of the Macau faction of the 14K Triad society and a ‘follower’ of former 14K leader Wan Kuok Koi (aka “Broken Tooth Koi”), although he has far surpassed Wan in wealth and influence. Surprisingly, the Macau prison sentence of 18 years for Alvin Chau is longer than that given to Wan Kuok Kui who was sentenced to 15 years imprisonment in 1999 on charges relating to being the leader of the Macau faction of the 14K, leading the gang war with the Wo On Lok Triad society, and trying to have the Judiciary Police Commissioner killed with a car bomb.

The Macau court trial follows a 2022 court case in Wenzhou, Zhejiang Province, in which 36 people connected to Suncity were found guilty of criminal charges relating to operating illegal gambling and sentenced to imprisonment.  The Wenzhou Municipal Public Security Bureau (PSB) investigation focused on Suncity operating as a cross-border gambling criminal group since 2007, and in 2016 opening online gambling and sports betting platforms in the Philippines.  Suncity were accused of developing Chinese nationals as gambling agents, as well as organizing Chinese citizens to go to Macau casinos to gamble by promoting gambling, providing credit and transport. Suncity set up an asset management company in China to provide services for gamblers to exchange funds for gambling chips, help collect gambling debts, assist customers in cross-border fund payment, using underground banks. The service gradually grew to become a cross-border criminal group with large numbers of full-time staff and a clear management structure. By July 2020, Suncity had a total of 199 shareholder-level agents, more than 12,000 gambling agents, and over than 80,000 gambler customers in China.

Junkets have been established in Macau casinos for decades.  Macau casinos have a long history dating back to its centuries as a Portuguese colony from 1557 to 1999.  In 1961, a public tender for the monopoly casino operating license was won by Stanley Ho and his Sociedade de Turismo e Diversões de Macau (“STDM”) company. Stanley Ho brought huge growth to Macau and transformed the city into the only Chinese gambling center for Chinese customers, who came from the mainland, Hong Kong, and the wider Chinese diaspora to gamble. STDM operated eight casinos in Macau, as well as a horse racing track, greyhound racing, and the only ferry service between Hong Kong and Macau. This monopoly made Stanley Ho and his associates astoundingly rich, but the involvement of organized crime groups caused doubt regarding the sustainability of the gambling business after Triad societies came into violent conflict in 1997 (when ‘Broken Tooth’ Wan Kuok Kui led the Macau 14K as the main protagonist).

STDM’s long established monopoly over the Macau gambling industry ended in 2002 when the local authorities allowed U.S. and other overseas corporate gambling operators to enter the market. However, organized crime involvement in the gambling business did not end, but instead criminal groups increased their revenue as they expanded their gambling marketing, money laundering, and debt collection activities into Mainland China. The U.S. gambling operators quickly learned that they could not legally either conduct marketing to customers in Mainland China or collect gambling debts, which are not legally enforceable in the PRC. The result has been 20 years of massive revenue for Triad groups that transformed themselves into “junket operators” to bring Mainland Chinese customers to Macau.

The US Commission on China stated in 2013 that “The gambling industry in Macau is reportedly tied to widespread corruption and the laundering of large amounts of money out of mainland China. This movement of money through Macau is fueled by a ‘‘junket’’ system, which reportedly aids mainland VIP patrons in bypassing China’s limits on how much money can be taken out of China. Casinos and junkets account for a large por­tion of Macau’s annual revenue, and one Macau academic esti­mates that US$202 billion in ill-gotten funds are channeled through Macau each year.”

It has been evident for several decades that the gambling industry in Macau was responsible for channelling huge amounts of corruption money out of China as well as enriching the Triads who dominated the junket business, who have been a key part of taking illicit funds out of China. The obvious corruption and criminality was ignored as so many people became rich from the gambling boom and Macau prospered. Macau casino junkets provide an ideal channel for money laundering, estimated in 2013 by the Macau University of Science and Technology to amount to at least HKD 1.57 trillion (US$ 202 billion in 2013).

The authorities in the PRC realised the extent of the problem, and since 2019 there has been a crackdown on underground bank fund transfers, cross-border illegal betting, as well as criticism of Macau junkets by the Mainland authorities. This has resulted in a diversification of operations by many Macau junkets to other parts of Asia. Suncity has operations in the Philippines, Cambodia, Australia, Korea, Vietnam and Russia and was trying to expand into Japan. As Macau junkets have expanded across Asia their ability to operate effectively as underground banks has increased significantly, making the junkets pan-Asian illegal gambling and money laundering operators.

There had seemed to be advance warning to the junket operators. In July 2019, a state-run news report denounced Suncity, the biggest Macau junket operator, for facilitating illegal online gambling in which Suncity denied the accusation. The report said that the practice had caused “great harm to China’s social-economic order”, and claimed that the annual amount wagered online by Suncity mainland clients was over 1 trillion yuan, equivalent to a staggering USD 150 billion, greater than the typical annual turnover of the online legal betting product in Mainland China, the state lotteries.

The enforcement action by the PRC authorities has been characteristically harsh. In July 2019, Zhao Kezhi, State Councillor and Minister of Public Security, announced that appropriate departments should take special action to crack down and destroy criminal organisations involved in illegal online gambling, underground banks, and network payment platforms. In January 2021, the Ministry of Public Security announced that during 2020, over 600 suspects were repatriated by Chinese police in collaboration with counterparts in countries including the Philippines, Malaysia, Myanmar, and Vietnam. By April 2021, according to Zhao Kezhi, the police had investigated over 17,000 cross-border apprehended 110,000 suspects, and stopping over 3,400 online gambling platforms and over 2,800 illegal payment platforms and underground banks. By the time of the crackdown by the Chinese authorities against illegal gambling from 2018, it was clear that Macau junkets and the Triad leaders involved in the largest operators were deeply involved in cross border organised crime.

The problem of organised crime in Macau casino junkets is not confined to that city or to their business in China, but is now international. In 2022, Australian gambling regulators have conducted multiple inquiries into misconduct and criminality in local casinos that has involved junkets from Macau, including Suncity.

Crown Resorts was found to have enabled the illegal transfer of funds from China, involving Chinese UnionPay credit cards, between 2012 and 2016. The process allowed “international patrons to access funds in order to gamble at Crown Melbourne,” evading Chinese currency restrictions. The inquiry found that “Chinese patrons were assisted in illegally transferring up to A$160 million in funds.”

The Star Casino processed around A$900mn of transactions by Chinese customers using China UnionPay. The use of the payment network for gambling contravenes both Australia’s anti-money laundering rules and Chinese capital outflow laws. Suncity operated the “Salon 95” exclusive VIP gaming room, located off-site from Star’s main Sydney casino, as part of its agreement with Star.

There is no doubt following both trials that the authorities in the People’s Republic of China (PRC) consider gambling and betting illegal except when licensed by the state. In addition, the trials and severe sentences in the Wenzhou and Macau cases send a strong signal regarding the attitude of the PRC authorities towards the involvement of organised crime groups in the illegal movement of funds out of China, which has been a major problem in the past several decades.

In China the authorities are typically slow to react at the state level to criminal problems, but when they do act they use overwhelming force and take concerted action. This is largely because there is a reluctance at city and provincial level to report problems to the central government in Beijing – If officials report a problem incorrectly, they are in trouble, and if they are presumed to have not appropriately dealt with problems then they are in trouble. The result is frequent delay in addressing criminal problems that become a state level issue. The huge illegal business of Suncity, and also other Macau casino junkets, is an illustration of this phenomena. The lesson to be learnt is that the Central People’s Government will take severe action against major criminal groups that effect the country, eventually.