Have some junkets managed to sidestep Singapore’s supposedly tough rules on VIP credit?
Imagine a situation where a junket operator or his or her employee checked in to one of Singapore’s two integrated resorts (IRs) as an individual VIP player. There’s nothing wrong with that. They could have had a good month’s business from their customers in Macau or elsewhere and decided on a busman’s holiday.
Imagine also, however, that this off duty junket person then ‘gave’ (or sub-let) his or her high roller chips to third parties. Imagine further that these third parties were described officially to the casino management as ‘friends’ of the ‘VIP’ but in reality were actually customers—either existing or new—of a junket operator. That would mean the off duty junket person was acting like an on-duty junket operator, but without the rigorous probity checks required by the Singapore government. How would the Singapore gaming regulators react to that and how would they police it, if at all?
Inside Asian Gaming asks this question because three separate gaming industry sources have suggested to IAG that this is indeed what’s been going on in some instances since the opening of the IRs—Resorts World Sentosa in February and Marina Bay Sands in April.
The method
One of the sources familiar with this reported trade described it like this: “There are several scenarios so far. One involves the junket representative bringing cash into Singapore as a private individual and as the ‘identified player’. He then draws down the chips from the casino and passes them to his ‘friends’ to play with. He gets the rolling on the chips and shares them with the players, aka his ‘friends’.
“What it means in practice is that junkets are operating in Singapore, whatever the regulations say about background checks. It’s a grey area as there is nothing in the CRA regulations to say a customer cannot pass chips to his friends,” adds the source.
For legal reasons, IAG is not going to mention the other alleged method described by this and other sources on how junkets get round the probity rules. But would the method described above actually be illegal under Singapore’s Casino Control Act (CCA) and its supporting casino credit regulations? It’s clear that it would break the spirit of the regulations, but intention and enforcement are two different things.
Singapore has in theory closed the door to Macau-style junkets by requiring very stringent checks on the personal probity of junket applicants, their staff and clients, including the source of the junkets’ working capital. The Singapore authorities haven’t publicly explained their rationale for this, but the assumption in the industry is that they are not satisfied in all cases that existing Asian junkets and Macau junkets in particular are necessarily free of links to, or influence from, organised crime.
IAG has looked at the wording of the applicable Singapore law and the accompanying credit regulations, and can find no reference to any rule to prevent private VIP players from sharing chips with friends.
Section108 of Singapore’s Casino Control Act 2006 states: “…no casino operator, licensed junket promoter, agent of a casino operator or casino employee shall, in connection with any gaming in the casino:
(a) accept a wager made otherwise than by means of money or chips;
(b) lend money or any valuable thing;
(c) provide money or chips as part of a transaction involving a credit card;
(d) extend any other form of credit; or
(e) except with the approval of the Authority, wholly or partly release or discharge a debt.”
Note the emphasis on “casino operator, licensed junket promoter, agent of a casino operator or casino employee”.
Loophole
It seems that a possible loophole regarding ‘friends’ is also not closed by the Casino (Credit) Regulations 2010, a supplement to the Act. Were, however, a commercial credit relationship to be found between the off duty junket rep and the ‘friend,’ the parties could fall foul of Clause 108 sub-section 9 of the Casino Control Act which forbids professional money lending in the casinos.
It states: “Any person who:
(a) provides chips on credit to persons other than as permitted [Editor’s note: permitted persons being anyone not a Singapore citizen/permanent resident and who qualify for VIP status by virtue of a minimum S$100,000 check in] or who is a premium player, shall be deemed to be a moneylender for the purposes of the Moneylenders Act (Cap. 188); and
(b) lends money in accordance with this section shall be deemed not to be a moneylender for the purposes of the Moneylenders Act.”
If, however, a checked in ‘VIP’s’ ‘friend’ were present in a VIP room at one of the Singapore IRs and had access to fewer than S$100,000-worth of chips, he or she could also technically be in breach of Part 1, sub-section 3 of the casino credit regulations.
In order to qualify as a ‘premium’ (VIP) player:
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“the total amount of money, chips or any cheque or traveller’s cheque credited to the patron’s deposit account in accordance with paragraph (2) is not less than $100,000 [Singapore].”
The only exception is if the player is a supplied with credit by a junket registered by the Singapore authorities, which would clearly not apply in an informal arrangement between ‘friends’.
Tax issues
There could also be the small matter of potential tax avoidance. A bona fide individual VIP checking in a minimum of S$100,000 for personal use is entitled under Singapore law to pay a discounted tax rate on the gross of five percent gaming tax (plus seven percent GST). But were an off duty junket rep to pass those chips to several ‘friends,’ each ‘friend’ would be playing with chips valued below the VIP check in level. Those people should in theory not then be classified as premium players, but as ‘mass market’ players, and should in theory be paying gaming tax rated at 15% of the gross (plus GST).
An interesting question is would the burden of proof be on the individual VIP customer checking in to prove he or she was a bona fide ‘individual’ and not acting in the capacity of a junket rep, or would the burden of proof be on Singapore’s Casino Regulatory Authority to prove the person was a junket rep in disguise? One wonders also whether the Singapore authorities went to the trouble of ‘stress-testing’ their junket regulations with a consultant with inside knowledge of junket operations before passing them into law. That would certainly have been a valuable exercise, given Asian junkets’ reputation across the industry for what might charitably be called creative thinking. We await with interest the CRA’s response to these claims.
