Will WeChat ban cut US-run Macau casinos’ vital link to China clients?
- The popular social messaging app is a critical communication tool for American operators in the city and their patrons in mainland China
- Trump’s executive order may be boon for non-US operators in Macau, analysts say
US President Donald Trump’s ban on Chinese social messaging service WeChat could undermine the operations of American casino operators in Macau and cloud their future in the city, according to industry observers.
Trump issued an executive order on Thursday that will make it illegal for US citizens and corporations to conduct “any transaction that is related to WeChat”.
The order is due to take effect 45 days from that date and was issued on the same day as a similar order banning TikTok, a short-video platform owned by Chinese tech conglomerate ByteDance.
“Probably 95 per cent of Macau’s gaming patrons are mainland Chinese. How do you communicate with them? WeChat,” said Carlos Lobo, a Macau-based lawyer at Weir and Associates.
Three of Macau’s six casino operators – Wynn Resorts, MGM Resorts International, and Las Vegas Sands – are American and each one operates in Macau via majority-owned subsidiaries.
Lobo, a former legal adviser to Sands China, whose parent company is Las Vegas Sands, said a ban on WeChat, a widely used messaging app, could be a windfall for non-American casino operators Melco, SJM Holdings, and Galaxy.
“This problem applies across the board to any US company in China: how can their local Chinese teams communicate with their bosses without WeChat?” Lobo said.
“The mainland Chinese tourists will prefer to go to Melco, Studio City, SJM or Galaxy rather than Sands, MGM, or Wynn. This has a toxic effect on competition that ultimately has a negative impact on the US casino operators.”
Ben Lee, managing partner at IGamiX, a Macau-based consultancy firm focused on the gaming industry, estimated that between 80 and 90 per cent of gross gaming revenues at Macau’s casinos came from mainland Chinese.
Gambling is illegal in mainland China and WeChat is an important communication channel for the Macau casinos with these clients.
“The casinos are not allowed to advertise in [mainland] China so their marketing hosts do use a lot of social apps to contact their clients and communicate promotions,” Lee said.
“So if they are deprived of this channel, in the absence of any other channel, they will be severely disadvantaged compared to their [non-US] peers.”
There are few details on how the WeChat ban will be implemented. According to the order, the US secretary of commerce will specify the banned transactions within 45 days of the day of the document’s issue.
On Monday, Morningstar equity analyst Chelsey Tam said in a note that a ban on all the US companies doing monetary transactions with WeChat could have a wide range of impacts on those American companies.
“Numerous American companies use Weixin to engage with and provide information to the Chinese population,” Tam said, referring to WeChat by its Chinese name.
“We assume the US government … would want to protect US businesses’ interests in China and not impose restrictive measures on Weixin.”
Lobo also said the extent of the order was not clear.
“So many mainland Chinese use WeChat in Macau’s casinos for all kinds of transactions. Are the American casino operators going to stop accepting WeChat Pay? There is this uncertainty now about the scope of the ban,” Lobo said.
“In the worst-case scenario there will be a total ban on any US company using WeChat.”
If this were the case, employees of Macau’s American casino operators would not be able to use their personal accounts as a workaround, Lee said.
“The last thing you want to do is to be caught using your own personal WeChat account promoting gaming in China,” he said.
But regardless of how the ban is implemented, analysts said the targeting of the app had already undermined the long-term future of US casino operators.
All six of Macau’s casino operators operate under concessions granted by the Macau special administrative region and those concessions expire in 2022. There will be a bidding process before then to determine who can continue operating in Macau.
According to Pedro Cortés, senior partner at a Macau-based law firm Rato, Ling, Lei & Cortés, Trump’s policies towards China’s biggest tech conglomerates mighty drive the Chinese government to retaliate by expelling the American casino conglomerates in Macau.
“China and Macau now have the upper hand in 2022,” Cortés said.
