Boasting the highest casino gambling revenues in the world, Macau is awash with glitz and glamour. Now piggybacking on that success like a tobacco monkey are Macau’s pawnshops, which also use the flashing neon lights to spruce up the fact that punters are selling some of their most valuable possessions.
Cash-strapped gamblers who have blown their money in the casinos are drawn to these lights like they are drawn to the casinos themselves, eagerly removing their Rolexes and other precious possessions just to get a little extra cash together to hit the tables again.
With revenues nearly six times higher than Las Vegas, Macau is a thriving area, filled with wealth and happiness, so it is ironic that pawn shops should prosper so well as Charles Dickens termed them “receptacles of misery and distress.”
Mainland Chinese Tourists Filling Casinos
Credit Suisse Group estimates that gambling revenues will climb 16 percent this year in the Chinese gambling mecca, reaching a record $44 billion, no small thanks to the pawning industry that has set up shop around these high-class casino and hotel venues, as the growth is set to be a result of the ordinary tourists visiting from mainland China, rather than the high roller clientele who can absorb a million lost here or there.
And since the ordinary tourist doesn’t have access to casino credit lines, (unlike the typical VIP player), pawnshop operators are sure to take advantage of the desperation of the ‘every man’ who heads to the city with ideas of winning a fortune at the tables.
“Unofficial funding channels, such as pawnshops, are likely to gain more importance as the casinos are keen to attract more premium mass gamblers,” said Gabriel Chan, who works as an analyst in Hong Kong for the Zurich bank.
Skirting the Law
But what really entices the punters is that these pawn shops allow mainland Chinese tourists, who fill the casinos of Macau day in day out, to get around China’s currency regulations by trading in goods rather than currency.
The amount Chinese nationals can take out of mainland China is currently capped at 20,000 yuan (around $3,200) so tourists head to the pawnshops where they act as though they are purchasing expensive goods using their credit cards. Once the transaction has gone through, they are refunded in cash as though they had changed their minds and decided to sell the item virtually straight away. In return for the dodgy transaction, the pawnbroker pockets around five to ten percent commission, and the tourist walks away with their bankroll, having happily skirted Chinese law.
Those from mainland China who are categorized as ‘mass-market visitors’ reportedly spend up to 500,000 yuan (around $8,000) on a trip to the city, and place minimum bets of around 2,000 yuan per hand, revealed Hong Kong-based analyst for Deutsche Bank, Karen Tang.
Pawnshops are certainly nothing new to Macau, as they date back 450 years, all the way to the Qing dynasty. But in recent years, the lift of the gaming monopoly after 40 years, back in 2002, enabled the pawnshops to flourish in the city as the world’s biggest names in the casino industry opened up shop.
In fact, over the past ten years, pawnshops in the city have more than tripled in number as they have enjoyed a steady growth alongside the casino industry. Now, there are around 170 pawnshops that can be visited by mainland Chinese tourists enjoying a gambling trip to Macau for an average of two days each time.
While there is no official declaration of precisely how much these pawnshops fuel the casino industry, gamblers can also reportedly gain a little extra cash by adding additional costs to their bill at a restaurant and receive a refund of the overpayment in cash, thereby skirting the law once again.
And as long as Macau sees an increase in revenue generated through the casino gambling industry, it is likely that little will be done to help prevent Chinese tourists from ducking the rules.