Macau Triads Still Ingrained in Gambling Markets

This week’s article on Tom ‘durrr’ Dwan and his rumored disappearance from the poker tables for the last long while has renewed an interest in the gambling ‘mecca’ of Macau – and all its associated negative sides.

Macau Triads activity, Chinese government crack-downs on gambling, declining revenues in the poker junket and casino industry – the list goes on and there seems to be no end in sight for the colony’s present woes.

Let’s take a look at some of the specific problems to get a better view of just how bad things are in the so-called ‘gambler’s paradise’.

Triads and empires – who controls Macau?

Until 1999, when Portugal handed back control of Macau to China, the Stanley Ho empire was the main force behind the gambling (and most other) economy of the small colony which lies some 40 miles across the Pearl River Delta from Hong Kong.

The region was a hot-bed of Triad activity, with bombings, shootings, stabbings and all manner of attacks occurring on a regular basis – and not only aimed against other Triad gangs from China trying to muscle in on the small enclave; prosecutors, policemen and the judiciary were all targets.

At one point, a senior police chief’s attempt to re-assure visitors and tourists verged on the ridiculous in its unintentional ‘black humour’:

One of the most notorious of the Triads involved was the 14K headed by ‘gambling junket operator-turned–notorious gangster’ Wan Kuok-koi, known as Broken Tooth (above).

In 2012, three years on from the handover to the Chinese, there were fears that another turf war would break out after a relatively peaceful time was broken by an attack on fellow casino owner 65-year old Ng Man-sun – also known as Ng Wai or ‘Street Market Wai’.

Ng was beaten in the restaurant of his own casino/hotel complex by 6 assailants, an attack which bore all the hallmarks of a Triad warning since only his arms and legs were targeted when the six men “rushed in and proceeded to beat the couple with hammers and sticks.

In a Time magazine interview in the late 90’s, before the assault, ‘Broken Tooth stated of Ng “I’m going to wipe him out,” and promised a “beautiful war,” finishing with “fate will not be kind to him.” Wan was subsequently jailed for various Triad-related offences, but was co-incidentally due for release about a month after the attack on Ng.

The ‘junket operators’ in Macau, responsible enticing and looking after the gambling high-rollers from mainland China and further afield have been a huge part of the gambling industry. Steve Vickers, a former commander of the Royal Hong Kong Police Criminal Intelligence Bureau - - who operated a business intelligence and risk organization in Hong Kong said at the time:

Another source stated of the possibility of a new turf war breaking out:

Fast-forwarding a few years, the 14K Triad gang recently appeared in the ‘Tom Dwan story’, after news that Dwan had helped out Paul Phua last year.

According to poker journalist Florian Gheorghe:

Gheorghe's investigation of Tom Dwan’s ‘unusual disappearance’ from the main poker-playing world also comments that:

This inter-linking of the various factors in Macau’s success, and also recent problems, begs the question… who controls gambling in Macau?

The Casinos, the Triads and the Chinese government - who controls gambling in Macau?

When Stanley Ho’s monopoly of the gambling industry in Macau dwindled with the 1999 change-over to China, and eventually ended in 2002, the authorities and Triads flooded in to wrest control of the massive industry, which last year alone accounted for over $44billion.

Outside investors also saw an amazing opportunity, with Steve Wynn and Sheldon Adelson pumping $10millions into the casino industry. The first foreign property was opened in 2004- Adelson’s ‘Sands Macau’ – followed by the ‘Wynn Macau’ in 2007, and by last year casino revenue in the colony had risen to over 5 times that of the Vegas Strip, with 51 casinos in the country, spread across 3 cities (one of which is Macau City).

As a Special Administrative region of China, Macau ostensibly governs itself in many ways and the Central People’s Government of China doesn’t levy any taxes on industry in China. This hasn’t stopped the Chinese government from launching a huge ‘anti-corruption’ crack-down which has hit Macau’s gambling industry extremely hard.

Just this week, Steve Wynn launched a scathing attack on the government’s regulatory bodies, who recently introduced plans to limit the number of gaming tables in casinos.

But why are the Chinese getting so involved? Well, the basics are very simple.

• Gambling is legal in Macau, but not in China
• The amount of money the (mainly) Chinese gamblers can take from China to Macau is extremely limited, about $3300 per visit, and about $50,000 per year in total, so
• The Macau ‘junket operators’ and the like therefore offer ‘credit’ to visitors, but
• Such debts aren’t enforceable by law back in China, and this is where the Triads come in.

Steve Vicker's take on the subject was:

A combined Guardian newspaper and UC Berkeley IRP report from this year expanded on this, quoting Tony Tong - a financier who backs Macau junkets – as saying that:

Although he also stated that debts were recovered through traditional channels also, “even if they were not legally enforceable.”

China and the US

With ridiculous amounts of ‘illegal’ money being recovered back in China –which obviously has to be ‘laundered’ -there comes with it the ‘associated’ businesses of drugs, prostitution, people-trafficking and the assaults and murders which accompany such ‘industries’.

And also, Chinese government officials themselves have often been partial to the Macau lifestyle on offer, so there is a huge corruption issue at the heart of the matter too. Hence the tightening of Chinese government restrictions in Macau, with potential and actual US involvement in the process.

As the Guardian special report explained earlier this year:

So, the Chinese government’s crack-down on such activities is hitting at the very core of Macau in an attempt to weed out and change the culture which pervades the entire colony. And this has a serious effect on everyone from the triads, to the billionaire US casino moguls, and to the tourists whose numbers have dwindled in the wake of such ‘aggressive tactics’ by the Chinese government agencies.

These agencies have the backing of President Xi Jinping, and it would appear that their vision of the future of Macau is more of a modern, exclusive tourist resort than a gambling getaway and crime-ridden problem.

Again, though, the Guardian investigation -in conjunction with the Investigative Reporting Program at UC Berkeley -foresee the future as being ‘difficult’ to say the least:

They begin, before focusing in on the potential problems involved:

And in the middle is the Chinese government who are apparently fighting against both sides at once, although the success of the ‘more than a gambling resort’ approach to the market shows that certain players have already understood the future direction.

The Future of Casinos in Macau

Adelson’s ‘Las Vegas Sands Casinos’ in Macau was described as being:

Which included a re-branding which featured David Beckham, but an approach such as this “may not stop those – reputable or otherwise – who have grown rich and powerful through the trade.”

The US authorities still have a say in what happens with US ventures in Macau under the Foreign Corrupt Practices Act, and both Adelson and Wynn have been facing tough questions over their business interests and involvement with the shadier side of Macau’s gambling industry, although to-date they have always had their licences to operate in Macau recertified by the US boards.

Whether this will continue indefinitely may come down to the result of the new turf-war currently being played out in a small colony far from US eyes between Chinese, Macau and US interests – both legal and criminal.

This year, the Chinese law is on the front foot, and only the next steps by their opponents will determine which way the war will go.