Macau has introduced an amendment to its “Law to Combat Gambling Crimes” that would impose criminal penalties on illegal currency exchanges within the city’s casinos. The amendment, which is set to be reviewed in the forthcoming legislative session, includes prison sentences of up to five years for those found guilty.

On Friday, government officials in Macau revealed plans to criminalise unauthorised money exchanges taking place inside the city’s casinos. Legislative Assembly chairman Chan Chak Mo stated that lawmakers are expected to vote on the bill before the end of the year.

The proposed changes, which have been added to the draft “Law to Combat Gambling Crimes,” include prison sentences of up to five years and would impose bans on offenders from entering city casinos for a period ranging from two to 10 years. However, there are no penalties outlined for casino patrons who utilise these unauthorised exchanges.

Illegal currency exchanges are often used by gamblers from mainland China to bypass Beijing’s stringent regulations on capital outflow and cross-border gambling.

Government Crackdown Launched in June

In June, Macau’s Ministry of Public Security initiated a crackdown on illegal money exchanges, although no criminal penalties were included at that time. The ministry linked these operations to various crimes, including fraud, theft, money laundering, loan sharking, and even kidnapping and murder.

The announcement of the amendment on 9 August coincided with, or perhaps was influenced by, the recent murder of a man involved in the illegal exchange trade. The victim was discovered on 7 August in his Cotai hotel room, having been fatally stabbed in the head and neck.

Local media reports indicated that the victim had been working with a money-exchange gang since the beginning of the year. Shortly before his death, he had won a significant amount at a local casino, amounting to approximately HK$2.5 million (£251,000/€293,500/$321,000).

Two suspects, a man from mainland China and a woman from Hong Kong, have been arrested in connection with the crime. Both are also reported to have been involved in the illicit money exchange operations.

Financial Impact

Analysts have suggested that the government’s stricter stance on illegal money exchanges contributed to lower gaming revenue in June and July.

Following the news of the proposed amendment, Macau casino stocks saw a decline. According to a Bloomberg Intelligence index, Galaxy Entertainment Group Ltd. experienced a drop of up to 5.7%, while Sands China Ltd. shares fell by as much as 5.2%.

“This negative news could add uncertainties and hurt the already fragile investment sentiment” towards Macau’s gaming industry, wrote analysts from Citigroup.

Officials have stated that these crimes have “seriously affected social stability” in Macau, which is the only region in China where gambling is legal. They have committed to disrupting the “entire industry chain” through targeted measures, including increased border checks.

As of May, around 1,900 unauthorised money changers had been apprehended in police operations and subsequently denied entry to Macau. Of these, 927 were reported to the Gaming Inspection and Coordination Bureau (DICJ) and banned from entering the city’s more than 30 casinos.

During the same five-month period, 30 Macanese individuals were found to have been involved in the illegal operations.