The global pandemic is causing a major liquidity crunch at Macau’s casino VIP rooms as Hong Kong dollars dry up and cross-border money laundering grinds to a halt, gaming insiders said.

Fears of gaming operators going bust have also sent high-rollers running, cashing out their chips and withdrawing funds and so fueling what industry insiders are comparing to a “bank run.”

The concerns come as Macau’s casinos, which drive the former Portuguese colony’s economy, continue to suffer from the plummet in visitor numbers as a result of the coronavirus.

Border controls restricting visitors from Guangdong and Hong Kong, which contribute the lion’s share of Macau’s gamblers, have been in place to different degrees since early this year.

In August, year-on-year gaming revenues in the world’s top casino hub fell by more than 90% for the fourth straight month, although the recent easing of border controls between Guangdong and Macau is expected to bring a slight reprieve.

The lack of Hong Kong dollars circulating through the casinos has led to a liquidity crunch so severe that some punters were reportedly unable to cash out chips.

Before the pandemic, tens of millions of Hong Kong dollars were being transported into Macau — legally and illegally — on a daily basis, a source close to the industry told Apple Daily. “Now, no one is doing it.”

Another issue has been Beijing’s crackdown on money laundering, which has hit Macau’s VIP sector hard, according to another source familiar with the matter.

Earlier this year, China identified the cross-border flow of funds for gambling as a national security risk.

Mainland authorities have been stepping up investigations of suspicious transactions and seizures of bank accounts, rendering it more difficult for junket operators — gambling promoters that help casinos source high-rollers — to move money for VIP clients.

Those looking to bypass the country’s strict capital controls and move large amounts offshore must now rely more on underground banking networks, which charge hefty commissions, the source said.

“Besides, the mainland authorities are targeting these underground banks too. It has become much harder for VIP rooms to transfer money,” the source said.

Increased law enforcement action has spurred customers to withdraw money from their VIP accounts. Many casinos provide these clients with “deposit services” and may even offer interest rates as high as 3%, much higher than the average bank.

“What’s going on at VIP rooms is akin to a bank run; there’s not enough cash for people so they can only ‘buy’ cash from underground banks,” the source said. “Of course, this comes at a cost. For every 100 yuan you buy, you might only get 80 to 90%.”

Gross gaming revenues fell by 94.5% year-on-year in August to MOP 1.33 billion (US$167 million), according to Macau’s Gaming Inspection and Coordination Bureau, the 11th consecutive monthly year-on-year drop.

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