One of Macau’s biggest drawing cards for wealthy visitors from mainland China and other countries has been their secluded VIP rooms that offer private, high-stakes gambling away from the noise and traffic of the main casino floor. But while these rooms may offer a luxurious setting for gambling, some believe that they’re also a den for money laundering and other illegal acts.

Third Parties Running VIP Rooms

That’s the take of some Nevada regulators, anyway, who say that many U.S. casino companies that also operate in Macau actually use third parties to run their VIP rooms, making it difficult or impossible for regulators to know what’s going on in those rooms and prevent illegal activities.

“Criminal transactions are widely alleged to take place just out of the direct purview of the casino,” said A.G. Burnett, chairman of the Nevada State Gaming Control Board. Burnett was giving testimony in Washington, D.C. before the U.S.-China Economic and Security Review Commission.

Burnett was far from the only expert who expressed such concerns to the commission. According to Professor I. Nelson Rose, the fact that the Chinese government limits money transfers from the mainland to Macau makes Macau’s VIP rooms the perfect unregulated place to get around such controls.

“The structure of the casino system in Macau effectively allows people to use the casinos to circumvent these capital controls,” said commission chairman William Reinsch.

Oversight Unclear

U.S. casino operators like MGM Resorts International, Las Vegas Sands and Wynn Resorts all operate in Macau. However, they typically allow outside vendors to operate their VIP rooms, meaning that the casinos are not directly in control of these rooms – and that the oversight of them by the regulators that oversee the casino operators is murky at best.

According to a report by Bloomberg, spokespeople for those three casino operators or local regulators were unwilling to comment on the allegations.

Last year, gambling revenues in Macau rose to $38 billion, further cementing the city’s spot as the world’s most lucrative gambling center.