As markets evolve, regulation needs to evolve as well as societies struggle to balance efficiency and equity concerns. Consider the gaming industry. Las Vegas was the capital for decades but the industry has gone global. (see the article here).
The problem is:
With no full-time staff in Asia and a mission that includes nurturing an industry increasingly dependent on China-controlled Macau, the granddaddy of U.S. gambling regulators may ultimately prove powerless to police a global business of which Las Vegas is no longer the capital, industry veterans said.
Though the Control Board can levy fines, ban employees and even revoke corporate licenses to operate gambling facilities in Las Vegas for misdeeds abroad, it has done little in the face of mounting evidence that Las Vegas Sands, Wynn Resorts and MGM Resorts International are relying on problematic business partners in Macau - and importing some of the region's crime issues to the United States.
Globalization brings new risks and ever more complicated governance problems.
The issue of junkets giving money to their clients and in some cases opening up lines of credit for gamblers in Vegas is a problem that has been around much longer than this article portrays. However, the scary part of this is that these junkets are no longer from domestic places and Vegas is seeing a great deal of international law bending or breaking depending on the circumstances. I know for a fact that the business that Chinese people in particular bring to Vegas is a huge source of revenue and future potential for these casinos. As mentioned in the article, baccarat has become a huge game in casinos that is mostly attractive to Chinese players. With virtual Chinese dealers and language options, these baccarat tables are filled with high rolling Chinese players 24/7. However, Vegas needs to institute some sort of gaming regulations to avoid loopholes that keep track of who is playing at their tables. These junkets have been bad for the casinos in the past and will prove to be again in the future.
ReplyDeleteLess regulation in Macau, means that casinos have much more control of money handling and administrative decision making. Unlike the way regulation hinders the utmost profitability in America, Macau clearly has a control board that does not care (,or is simply ignorant) to better regulation in promotion of equity. Less needed transparency in Macau also means that casinos have more leeway to behave in a fashion that ensures profit over the rudimentary altruistic ideals of sheer fairness or economic equity.
ReplyDeleteDemand is hot! In Macau that is; as well as from Asian junkets who flock to Las Vegas with full pockets of cash to spend. How can these casinos ignore this demand for their goods and services? Economics 101 would agree, that they are NOT going to choose to stay here, rather than move to a booming market elsewhere (regardless of company country origin).
This influx of so much capital and consumerism from Asia to Nevada,and in markets abroad--is impossible for these firms to ignore. Favoring American consumerism is a lovely notion, but lets be honest here. In our increasingly globalized world, where mobile firms know no bounds-- Why on earth would they stay in a lesser market, with more regulations that hinder maximum profitability.
I feel that the NGC should pretty much let whatever happens in Macau stay in Macau, but at the same time it would be wise for them to try to prevent junkets in the US. If this kind of shady play is going to be the primary source of future revenue for Vegas, they should look for new sources. Vegas may not be the international hub of gambling anymore, but it is still the capital, and if internationals want to play in Vegas, they have to play by our rules. If players want to get around our regulations, they will find a way, but we should not make it any easier for them either.
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