MGM China has categorically dismissed rumors suggesting that its co-chairperson and executive director, Pansy Ho Chiu King, has any intention of reducing her shareholding in the company. Reports from Hong Kong media had suggested that up to 380 million shares in MGM China were recently shifted into the Central Clearing and Settlement System (CCASS), triggering speculation about Ho’s possible divestment.

MGM China Maintains Pansy Ho’s Steadfast Position

The share rearrangement occurred in two stages – first in mid-October through Standard Chartered Bank (Hong Kong) and later in mid-November via BNP Paribas. Contrary to market speculation, MGM China clarified that these transactions were part of previously arranged dealings between Ho and her custodian banks and did not signify any sell-off, reported Macau Business.

MGM China’s financial performance for the third quarter of 2023 showcased resilience, with net revenue reaching $813 million, marking a notable 10% increase compared to the same period in 2019, pre-pandemic. The adjusted property EBITDAR also witnessed a robust ascent by 23% from the second quarter, amounting to $226 million. Analysts at JP Morgan Securities (Asia Pacific) noted that the figures exceeded expectations by 3%, primarily driven by gains in the company’s share of the mass market.

Pansy Ho, the eldest daughter of Macau casino patriarch Stanley Ho, is a significant shareholder in MGM China, holding the entirety of her equity interest, which recently amounted to 380 million shares. Although Ho has a track record of reducing her stake in MGM Resorts International since 2019, she has consistently maintained her position in MGM China.

Market Fluctuations Pose Hurdles for Pansy Ho’s Potential Divestment

Market observers suggested that even if Ho were contemplating a sale, the current climate may not be conducive. Macau casino stocks have recently experienced a dip, with all but MGM China touching their lowest levels since early 2022. This could potentially dissuade Ho from any significant divestment, given her historical aversion to selling low.

At the same time, investors from Asia and beyond are increasingly turning to Macau casino debt, viewing it as a more lucrative and potentially less risky option than corporate debt or shares. The recovering gross gaming revenue in Macau has attracted attention, signaling a brighter future for the region. 

Despite Macau stock prices struggling to reach pre-pandemic levels, investing in bonds is seen as a more secure option, with trust in Macau casino bonds leading to credit rating upgrades for companies like Sands China and Melco. The appeal also stems from Asia’s low default rates and a decrease in overall bond market supply due to the departure of many Chinese firms. 

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Earlier this year, the internet regulator in China, the Cyberspace Administration of China (CAC), announced an unexpected probe into one of the local operations of DouYu, the Tencent Holdings-backed leading live streaming platform. At the time, local media reports confirmed that the watchdog sought to address issues with the platform related to pornography, among other content that is prohibited in the country.

Now, a Monday report released by China state-owned media outlet, Cover News, reveals that contact with Chen Shaojie, DouYu’s chairman, has been lost recently. While the report did not confirm that the chairman has been arrested, some local media outlets suggested that this may be the case. Allegedly, Shaojie’s disappearance may relate to content on the streaming platform involving gambling and pornography.

Details on the topic remain scarce but according to the recently released report, Shaojie was “taken away” by authorities in China. He is allegedly assisting with an ongoing investigation. The last time DouYu’s boss was seen was approximately three weeks ago. It remains unclear what the target of the investigation is and whether or not it is related to the probe of the CAC dating to earlier this year.

Not the First Time High-Ranking Executive Goes Missing

Although the latest announcement comes as a surprise, it is not the first time a high-ranking official in China has gone missing. Recently, Bao Fan, the founder and CEO of China Renaissance, and Jack Ma, the CEO of the globally recognized eCommerce business, Alibaba, also temporarily went out of public view.

This week, the South China Morning Post obtained a statement from DouYu in light of the news about Shaojie’s “disappearance.” The leading live-streaming company explained that its operations continue as normal. However, DouYu did not disclose information about its chairman’s whereabouts and neither confirmed nor rejected reports about his involvement in an ongoing investigation in China.

The last time Shaojie appeared publicly was this summer. Back in August, DouYu’s chairman participated in a conference call, to discuss the company’s second quarter results.

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China, which prohibits gambling outside of certain regions, has cracked down on yet another illegal gambling operation. Following enforcement action carried out this weekend, the police arrested 93 people and seized around $125 million (figure has been converted to USD).

As a result of the raid, the illegal iGaming platform is no longer available. Investigators will leverage data secured during the raid to make additional arrests if needed.

The operation was carried out in Zhaotong, a city in the province of Yunnan. As reported, the action was the culmination of an investigation that started in 2021. The culprits ran an online gambling scheme, in violation of China’s gambling rules.

The Operation Took Many Months

The authorities did not rush the investigation and instead, created a team that was tasked with understanding the gambling operation and learning its true extent. The illegal gambling operator ran multiple websites, all of which operated on highly-advanced software.

In addition, the illegal operation leveraged multiple game tools and had many regional representatives. The government, therefore, had to plan carefully before initiating action.

Following sixteen months of investigations, China finally launched raids on the illegal operator. The police raided a total of nine locations, some of which were outside the Yunnan province. As noted, the action resulted in the arrests of 93 people and the seizure of $125 million. In addition, the police reportedly seized 27 computers and 80 mobile devices.

China Continues War on Illegal Gambling

At the beginning of this month, China’s Ministry of Public Security published a report on its progress in cracking down on illegal gambling. In six months, the local law enforcement managed to take action against 10,000 criminal cases and 75,000 administrative cases related to gaming, primarily taking place in rural areas. Throughout the operation, local authorities seized a total of $104 million.

The ministry’s crackdown on gambling in rural areas began in November. Since then, the reports related to illegal gambling have been steadily declining, attesting to the efficiency of the operation.

To make sure that no more illegal gambling rings sprout up, China implemented monitoring policies and has so far established a total of 101 monitoring stations across the country.

Illegal gambling organizations in China would often target addicts and unemployed people, making them extra dangerous to public health. Qi Xiguo, an official of the Ministry of Public Security, promised to keep on working to protect Chinese citizens from illegal gambling.

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Chinese authorities allege that Zhijiang played a central role in organizing and facilitating illicit gambling activities, which have long caused concern due to their association with criminal networks and potential societal harm. As a result of the evidence presented against the businessman, China has canceled his visa, enabling his deportation. However, She is prepared to use every legal option to evade or postpone such a measure.

She Argues He Is No Longer a Chinese Citizen

With the legal proceedings initiated by Chinese authorities, She Zhijiang is contesting his extradition from a foreign jurisdiction. Zhijiang’s legal team is expected to argue against the measure on various grounds, including concerns over fair trial rights, potential mistreatment, and the political motivations behind the charges. This high-stakes battle is likely to involve intricate legal arguments and diplomatic negotiations.

She’s primary defense relies on the fact that the casino mogul is technically no longer a Chinese citizen, having obtained Cambodian citizenship. He also argued that the government had many chances to arrest him as he still held a Chinese passport but pursued legal action only after he became a citizen of Cambodia. 

The businessman’s legal team is preparing his defense, hoping to appeal to international extradition law. Such cases, particularly those involving individuals of significant prominence or ties to the business world, often present complicated legal and diplomatic challenges. The resulting legal process can take years to conclude, meaning She should remain safe in the foreseeable future.

The Case Will Have Far-Reaching Implications

Despite the casino kingpin’s defense, the Chinese government has presented some damning evidence. According to She’s arrest warrant, he was the head of a criminal gang that operated between January 2018 and February 2021, collaborating with several companies to maintain his illegal online gambling platform. Authorities allege that 330,000 gamblers transferred $22 million abroad, netting She at least ten years in prison.

The escalation of this case matches China’s recent crackdowns against illegal gambling. The government initiated 10,000 criminal cases and 75,000 administrative cases related to underground casinos, primarily in rural areas. Hong Kong police also completed a successful operation against Triad members, investigating a connection between unlawful gambling, drugs, and trafficking.

Although the case against She represents only a fraction of the Chinese government’s anti-gambling efforts, it may have substantial implications for the casino industry and international cooperation in combating transnational crimes. The outcome of the extradition battle will have far-reaching consequences, not only for She Zhijiang but also for the broader fight against illegal gambling operations and the continued efforts to safeguard public safety and welfare.

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The note focuses a big part of its report on Bloomberry Resorts, the company behind Solaire Resort, which is expected to soon release its full-year results for 2022 and the last quarter of the year. According to the note, Bloomberry can expect to see its gross gaming revenue increase by another 9% in 2023, and further improve by 32% in 2024.

Analysts Bullish on Long-Term Casino Recovery

This could be indicative of the good times ahead, but this growth will not be immediately driven by Chinese visitors. In fact, Chinese travel in the region, including the Philippines and neighboring countries, to wit Malaysia, Indonesia, and others, will remain fairly suppressed at levels of 36% of its 2019 numbers.

The note also argues that the “quality” of Chinese VIP visitors has also declined due to the economic background at home, with the property bubble bursting and manufacturing slowing down. In the short-term, there would be a conservative boost to the Philippines, the note further adds.

Even though there won’t be as many Chinese visitors coming in, the note remains fairly confident in the future of Bloomberry and its ability to attract an international clientele elsewhere.

The Philippines will have to weather the slow recovery, as traffic from Guangzhou and Incheon has remained slow, but the country’s long-term prospects are solid, Maybank Securities seems to believe. As to the casino sector in the country – it will continue to improve consistently, the note concludes.

Still Issues to Fix in the Industry at Home

Meanwhile, the casino industry in the Philippines is see-sawing between public and political disapproval. The Philippine Online Gaming Operators are among the most heavily criticized entities in the country – both by local and by Chinese diplomats, and are tied to what is alleged to be illegal gambling activities.

At the same time, some lawmakers have been pushing for the privatization of PAGCOR, the country’s gambling regulator and regulator, arguing that this would boost tax revenue for the state.

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China in particular has been very keen to eliminate cross-border gambling, expending a considerable effort to this end over the past years, arresting thousands of suspects, shuttering gambling sites, operations, and more.

All the while, the country has been trying to elicit the same level of commitment from neighbors such as the Philippines and Cambodia to whom China is an important trading partner and can therefore exercise its charm offensive.

China Continues to Work with Cambodia on Restricting Illegal Gambling

But now, the two Asian countries have come to an agreement to strengthen their bilateral ties insofar as cracking down on illegal online gambling and cross-border gambling is concerned. A press briefing of the Chinese ambassador to Cambodia Wang Wentian paid particular attention to illegal gambling that was emanating from or being facilitated by illegitimate organizations in Cambodia.

The Khmer Times cited the ambassador as saying that China is prepared to work with Cambodian authorities and that transnational crime, such as drug and human trafficking, illegal online gambling and other illicit activities, should be dealt swiftly with. Part of this effort would require the continued sharing of information between law enforcement in the two countries.

China has already had success in projecting its ambitions to crack down on illegal gambling in Asia. The country convinced Cambodia to stop issuing new online gambling licenses and the government further decided to suspend licenses for online gambling properties which were deemed void on January 1, 2020.

Fighting Illegal Gambling Has Already Begun in Cambodia

Cambodia has also since tried targeting some of the hot spots in the country connected to illegal gambling activities, such as Sihanoukville, a coastal town that has raised media headlines with repeated reports of human trafficking which have tarnished Cambodia’s international reputation.

In January, the country said that it had shut down more than 200 illegal gambling businesses between September 15 and December 27. These efforts are continuing into 2023. As to licensed gambling operations in the country, Cambodia has urged them to pay their due tax, amid a larger overhaul of the casino’s taxation system in the country.

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In world circles, Cambodia is infamously known for illegal gambling, kidnapping and other criminal activities. However, recently the country’s government has been doing some house cleaning, especially tackling illegal gambling. It appears their efforts have caught the attention of other countries, as their next door neighbor, China has offered to help it flush out crime from its system totally.

China Lends a Helping Hand to Fight Trans-national Crimes

During a press briefing held by China’s ambassador to Cambodia Wang Wentian after the visit of Cambodia’s prime minister Hun Sen to China, the ambassador highlighted the strengthening diplomatic cords between the two countries. Of particular note in Wang’s speech, he said China is ready to help Cambodia tackle transnational crime, such as illegal, cross-border gambling, human trafficking and drugs.

Wang reiterated China’s commitment to working closely with Cambodia to eliminate criminal activities from the country. He said to the Khmer Times: “We are committed to working with the Cambodian authorities. We must prevent and crack down on transnational crime, human trafficking, drugs, illegal online gambling and other crimes.”

Fighting Illegal Gambling to be aided by Information transparency between both Countries

The ambassador explained that what was needed is a transparency of information between both countries. He called on Cambodia’s law enforcement to work hand-in-hand with China’s law enforcement to bring down crime in Cambodia.

Recently Cambodia has been on a crusade against illegal activities in the country, especially in the coastal town of Sihanoukville. There have been multiple reports of the town being a den for kidnappers, human trafficking– all linked to the countless illegal casinos in the town. Cambodia’s authorities are also making its legal casinos tow the straight and narrow, as it urges them to pay their taxes.

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