JP Morgan: e-yuan at casinos “highly unlikely”

Analysts say the adoption of the cryptocurrency would make the 44 per cent commission paid to junkets unnecessary.

Macau.- JP Morgan Securities has weighed in on reports that Macau was considering introducing use of the China-backed cryptocurrency, the e-yuan, for casino transactions.  

Bloomberg reported last week that authorities were in discussions with casinos about the introduction of the digital currency to replace the Hong Kong dollar.

Macau’s Gaming Inspection and Coordination Bureau (DICJ) immediately denied the report.

Now analysts say implementing the e-yuan, which is backed by the Chinese Central Bank, could put VIP junkets out of business.

The move would “dramatically reduce the need for junkets,” JP Morgan Securities has reported.

The move would limit the amount of money VIPs would be able to bring into Macau to CNY50,000 (US$7,648), analysts said, and would mark the end of the “hefty commissions” high-rollers pay to junkets, which equate to about 44 per cent of VIP gross gaming revenue (GGR).

However, analysts DS Kim, Derek Choi and Jeremy An said: “We don’t think investors should make anything of this news, at least for now.” They added the implementation of the currency was “highly unlikely in the foreseeable future.”

The change would also give mainland China authorities “a greater visibility on gambling activities in Macau, on an individual level,” which could effectively wipe out a VIP sector that accounts for approximately 15 per cent of the casino-operator EBITDA, reducing the sector to non-Chinse VIPs only.