Deposits in Macau’s Casinos: Joint Liability of Concessionaires for Gaming Promoters’ Actions

I. INTRODUCTION

Casino junkets (referred to as “gaming promoters” under Macau’s gaming law) ¹ are specialized intermediaries in the casino industry and are primarily responsible for bringing high-rolling gamblers—often referred to as VIP players, who contribute significantly to the gross gaming revenue (GGR) of the Macau Special Administrative Region—to the casinos. ² In Macau’s casino ecosystem, junkets have been instrumental in attracting high-value clients, who often come from mainland China, and facilitating their VIP gambling activities by coordinating travel, accommodations, and various other services. ³ Notably, the role of casino junkets in Macau extends well beyond providing basic amenities or functioning merely as tour and travel representatives. ⁴

Casino junkets in Macau have also been heavily involved in complex financial arrangements, performing services such as facilitating currency exchange, extending casino credit, and managing the lending and deposit of chips. Thus, junkets not only are pivotal as key sales force of Macau’s gaming industry but also serve as central figures in gaming-related civil financial disputes. Despite the numerous controversies that have historically implicated Macau’s junkets, this discussion specifically focuses on one aspect of their services: the deposit of chips or cash for others. ⁵ This practice has attracted significant criticism due to multiple instances of junkets failing or refusing to return patrons’ funds, whether in cash or chips.

In practice, many patrons choose to deposit chips or cash with junkets to avoid the inconvenience and risk of carrying large sums. In some circumstances, junkets have promised high-interest returns on deposited funds. However, when junkets cease operations (as in the Suncity case) ⁶ or when their employees embezzle funds (such as in the Dore case), ⁷ the allocation of civil liability warrants careful examination—particularly in regard to whether casinos (concessionaires) should be held jointly liable for lost funds. ⁸ Through an analysis of recent Macau court rulings and legislative changes, this article examines the situations in which casinos may be civilly liable when junkets fail to return or adequately compensate patrons for their lost deposits.

II. FINANCIAL RISKS OF JUNKET OPERATIONS

In Macau’s gaming industry, casinos have long outsourced specific financial services, such as the deposit of chips and money, to junkets. This outsourcing has allowed casinos to benefit from streamlined operations and has facilitated the gaming activities of high rollers. In turn, to effectively attract more patrons, junkets often hire collaborators (referred to as “gaming agents” under Macau’s gaming law) ⁹ to also provide these services. This arrangement both affords junkets the privilege of access to substantial funds—a privilege that ideally should be tightly regulated—and may lead to financial disputes such as deposit theft and embezzlement.

Patron deposits serve either as a mechanism for continued gaming or as an investment and are motivated by the convenience of avoiding carrying around large sums or the promise of high returns. Financial services that alleviate certain logistical challenges, such as those caused by mainland China’s customs regulations, are necessary, but these practices have proven problematic. ¹⁰ Unlike licensed financial institutions, such as banks, which must meet stringent requirements to ensure the safety of customer funds, Macau’s junket operators typically lack the necessary safeguards to guarantee patrons’ financial security.

While junkets have played a role in Macau gaming ecosystem for a long time, their growth is inextricably connected to the liberalization of the gaming industry that took place in the 21st century. In 2001, the Macau Special Administrative Region government announced the end of its longstanding gaming monopoly, paving the way for international operators to enter the market. By 2002, multiple concessions had been granted, modernizing the gaming industry and intensifying competition. Throughout this shift, junket operators played a central role, not merely by bringing in VIP clientele but also by providing substantial credit lines to these patrons. Before the enactment of Law No. 5/2004, such credit extensions operated in a legal gray area. ¹¹ With the 2004 legislation’s formal recognition of credit-based activities, junkets and casinos found themselves legally empowered to engage in lending practices that would fundamentally reshape their relationships with high-value customers.

This formalization, while providing legitimacy, also introduced complications. While Law No. 5/2004 granted legal protection to credit operations, it failed to clearly delineate the scope of responsibility between casinos and their junket partners. ¹² Casinos endorsed junkets by authorizing them to operate VIP rooms, thereby implicitly assuring patrons of the reliability of the services and lending they received. Following the legalization of credit activities, both casinos and junkets increasingly relied on these mechanisms to attract and retain VIP gamblers, boosting the prevalence of complex debt scenarios. ¹³

In an attempt to rein in escalating earnings and discourage predatory practices, the government introduced commission caps for junkets in 2009. ¹⁴ Instead of reducing risk, these restrictions prompted junkets to adopt even more aggressive financial strategies. As straightforward profit margins narrowed, junkets frequently turned to high-risk lending and deposit-taking schemes, sometimes offering high-interest returns to patrons who entrusted them with large sums. Armed with legal recognition and their embedded presence within VIP rooms, junkets cultivated an illusion of security and steady cash flow. In practice, this gave rise to opportunities to appropriate these funds.

Junket operators’ financial operations have been connected to two main problematic practices, namely, (1) leveraging their business relationships to access patrons’ funds without intending to return them and sometimes misappropriating those funds for personal gambling and (2) employing Ponzi-like schemes by offering high interest rates to attract deposits and using their position as key participants in the gaming industry (e.g., working for or owning VIP rooms) to create the illusion of significant cash flow stability.

Judicial cases have arisen from the closure of junket operations, embezzlement, or other incidents that have resulted in the failure to return or adequately safeguard patrons’ deposits, raising serious concerns about legal liability. ¹⁵ In such cases, casinos appear to be the most relevant party, as they are the ones to authorize and partner with these junkets; therefore, they might be expected to assume responsibility for returning deposits when junkets abscond with the money or are otherwise unable to return the deposited sums.

The joint liability of the casinos emerges in this context not directly from the contractual clauses themselves but from the regulatory environment in which the contract operates. ¹⁶ Casinos, holding primary licenses and acting as core regulated entities, shoulder an enhanced responsibility to ensure that their chosen promoters abide by the law. Once the promoter is authorized through this contract to act in service of the casino’s business objectives, their misconduct—be it unlawful credit extension, regulatory violations, or harm to third parties—can arguably be imputed back to the casino. This linkage reflects the underlying rationale that the promoter’s actions are undertaken under the casino’s auspices.

This obligation of the casinos to be liable for actions undertaken by gaming promoters was envisioned within the Macau legal framework since 2002, with Article 29 of Administrative Regulation No. 6/2002 establishing that: “The concessionaires are jointly and severally liable with the gaming promoters for the activity carried in casinos by the gaming promoters, their directors and employees, as well as their compliance with the applicable legal and regulatory rules.” Still, for a significant time it was unclear the extent to which the casinos could be held liable in the scenarios described above. In more recent years, however, a number of court rulings and legislative intervention have clarified the extent of liability in such situations.

III. CASINO LIABILITY CASE LAW

In defining the extent of the liability of casinos for actions undertaken by junkets operators, the “Dore” decision in November 2021 by the Court of Final Appeal emerged as the landmark case. ¹⁷ In this decision, the Court of Final Appeal confirmed a more expansive interpretive approach of Article 29 of Regulation No. 6/2002, thereby extending liability to concessionaires for virtually all gaming promoter activities serving their business interests. ¹⁸

This case emerged from an incident in 2015 where one of Dore’s managers absconded with around HK$100 million. While the money may have been deposited with the intention to operate primarily as an investment rather than to participate in gaming activities, ¹⁹ the Court of Final Appeal still found that both the junket and concessionaire could be held liable. The Court emphasized that the public nature of casino concessions and their responsibility to uphold public welfare objectives require that concessionaires be accountable for activities conducted under their purview. Casinos could not simply contract out business functions to junkets and disclaim responsibility; rather, they are duty-bound to supervise and control their junket partners’ conduct.

This decision triggered multiple subsequent proceedings where depositors of money in junkets, sought to recover their deposits directly from the concessionaires. For instance, as reported by the Office of the President of the Court of Final Appeal, during January and February 2022, the Macau Court of Final Appeal adjudicated nine cases involving junkets’ misuse of deposited chips in VIP rooms. ²⁰ These cases primarily involved two major junket operators: Dore Entertainment Company Limited (“Dore”) and Suncity Gaming Promotion Company Limited (“Suncity”), both of which operated VIP rooms under agreements with Wynn Resorts (Macau) S.A. (“Wynn”) and MGM Grand Paradise S.A. (“MGM”), respectively. ²¹

The cases involved patrons who had deposited significant sums of money, ranging from HKD 1 million to HKD 60 million, with the junkets, only to be denied repayment. The plaintiffs sought compensation from both the junket operators and the partner casinos, arguing that the casinos were jointly liable for the actions of their authorized junket partners. ²²

In five of the nine cases, the Court of First Instance ruled that the casino concessionaires were jointly liable for the debts incurred by the junkets operating within their premises. The Court found that by allowing the junkets to conduct activities within their VIP rooms, the casinos were effectively endorsing those activities and, therefore, bore responsibility for the financial obligations that arose from them. ²³ The decisions emphasized the notion that casinos cannot simply delegate financial activities to junkets without assuming some level of oversight and accountability. On appeal, the Court of Second Instance upheld these rulings, reinforcing the principle that casinos were liable for the actions of their junket partners.

In two other cases, the Court of First Instance initially rejected the plaintiffs’ claims due to a lack of evidence proving the alleged deposits. However, upon appeal, the Court of Second Instance reevaluated the evidence, confirmed the legitimacy of the deposits, and subsequently held both the casino concessionaires and the junkets jointly liable. ²⁴

The remaining two cases presented more complex scenarios. The Court of First Instance ruled in favor of the plaintiffs but only held the junkets liable, exculpating the casinos. Upon appeal, the Court of Second Instance reversed the ruling in one of the cases, imposing joint liability on the casino and the junket, whereas in the other case, it upheld the original decision, finding no direct evidence linking the deposits to the junket’s obligations. ²⁵

All nine cases eventually reached the Court of Final Appeal, which took a definitive stance by interpreting Article 29 of Administrative Regulation No. 6/2002 in accordance with its earlier interpretation established in the Dore decision of November 2021. The Court ruled that casino concessionaires are jointly liable for activities conducted by junkets on their behalf within casino premises. It further ruled that casinos are jointly liable irrespective of whether they had committed any administrative violations and that this liability covers all junket activities conducted in the interest of the concessionaire. It is important to note that the reported cases represent only a small fraction of the numerous pending proceedings addressing similar issues. Furthermore, the scope of this joint liability was clarified as part of the broader reforms undertaken in Macau’s gaming framework since 2022.

IV. KEY REGULATORY CHANGES SINCE 2022

The 2022 legal reforms marked a pivotal shift in Macau’s gaming laws by addressing systemic deficiencies in the previous legal framework. ²⁶ Macau’s Gaming Law No. 16/2001 was amended by Law No. 07/2022 in 2022, updating the gaming legal framework. ²⁷ Under the new Gaming Law, the operational regulation, Law No. 16/2022, was also enacted, introducing regulatory shifts highly relevant to the daily operations of junkets. The junket system was one of the targets of the law, as it has long been associated with money laundering, side betting, illicit currency exchange, loan sharking, and financial misconduct due to inadequate oversight. Although the gaming law reforms covered a broad swath of issues, this section focuses specifically on the regulatory changes addressing deposit practices. (1)

Prohibition of Deposit Services: The amended gaming law explicitly prohibits junkets—and, by extension, their collaborators (gaming agents)—from independently providing deposit services. These collaborators, who assist junkets without being formal employees of the casino, could be nonresidents of Macau and previously operated without clear contractual obligations, thus complicating effective regulation. The new law aims to address these ambiguities by explicitly banning this group from indiscriminately accepting deposits from patrons, whether in cash or chips. ²⁸

Article 6 of Macau Law No. 16/2022 states that only concessionaires can provide services related to the storage of customer funds while banning junkets or collaborators from independently offering such services. ²⁹ Specifically, while complying with anti-money laundering and counterterrorism financing regulations, concessionaires are permitted to provide the following services:

Opening dedicated accounts for players to store chips or funds for gaming purposes. This allows concessionaires to temporarily receive cash or securities from gaming players for deposit into these accounts.

Meanwhile, Article 63 (3) of this law, ³¹ as elaborated in Opinion No. 7/VII/2022 by the 2nd Permanent Commission, clarifies the joint liability specified in the former Article 29 of Administrative Regulation No. 6/2002—specifically, it addresses how courts should interpret cases where the former legislative framework still applies. It states that casinos are only jointly liable for deposits directly linked to gaming activities and describes when a deposit is deemed to be used for gaming activities. According to Opinion No. 7/VII/2022, only monies used for buying chips and redeposited in the account and a patron’s winnings are covered by the concept of “activity carried out in casinos.” This provision ensures that concessionaires are insulated from liability related to funds that lack connection to gaming activity, thereby minimizing ambiguities and focusing liability on verifiable gaming deposits. This, therefore, limits the more extensive liability for concessionaires that had resulted from some of the cases decided by the Court of Final Appeal, tying the liability of the concessionaires to situations connected with actual gaming activities. (3)

Criminalization of Unlawful Deposit Practices: Under Article 40 of Law No.16/2022, accepting deposits unrelated to gaming is explicitly criminalized from this point forward. ³² The article specifically states the following:

If a concessionaire, gaming promoter (junket), management company, or members of their administrative bodies, representatives, or persons acting under their instructions deposit funds belonging to others that are not intended for gaming purposes, and if no heavier penalty applies under another law, they shall face the following punishments:

These reforms acknowledge the risks of the deposit practices offered by junkets and unauthorized personnel and align with the goal of the new gaming law, which is encouraging concessionaires to actively contribute to a safe and transparent gaming environment rather than solely focusing on the profits generated by their concessions. ³³

V. IMPACT ON CASINOS AND JUNKETS

The recent changes in gaming legislation have significantly reshaped the landscape for casinos and junket operators, who are now subject to much stricter oversight under the updated gaming law of Macau. The impacts are as follows:

Reduced Autonomy for Junkets: While casinos in Macau offer “safe box” services through third parties, such as junkets, to store substantial amounts of cash or chips for patrons, many gamblers tend to have a lax attitude toward these deposit services, prioritizing convenience over record-keeping and regulatory oversight. However, junket operators can no longer independently provide deposit services, which limits their role in handling patron funds and increases their reliance on concessionaires for these services. ³⁴

To determine whether deposits are intended for or stem from casino gaming, it is essential to review the casino’s redemption and gaming records. Cash or chips deposited in junkets’ VIP rooms (their designated workplace) that lack credible records of chip redemption or betting and that have no direct link to casino gaming are not classified as “activities conducted in a casino” under Article 29 of Administrative Regulation No. 6/2002.

For example, if a patron deposits HKD 10 million with a third-party service provider like a junket but only exchanges 1 million for chips to place bets, only that amount exchanged into chips and used in gaming is deemed associated with casino activities. Any unspent chips or winnings from casino gaming that the patron later deposits back with the junket count as “activities conducted in a casino.” In contrast, funds that are not used in gaming—such as the remaining 9 million in this example—do not meet this criterion. Furthermore, if the patron loses chips during wagering, those forfeited chips—now retained by the casino—are excluded from this definition, as they cannot be redeposited with the junket. ³⁵

VI. CONCLUSIONS

Since 2021, the “VIP room” market has undergone upheaval due to new laws aimed at reforming junket operations, leading to many junket closures, which has disrupted funding and caused the rapid dissipation of patrons’ deposits. ³⁶ Junkets often have access to millions of HKD daily, and this money is typically stored in unsecured locations such as hotel rooms, which poses a significant risk of misappropriation. Compounding this situation are the difficulties patrons face in asserting their claims amid unpredictable policy changes and unlawful actions that result in junket closures or embezzlement. Such circumstances could undermine Macau’s reputation as a premier destination for high-stakes gamblers, particularly as the region seeks to distinguish itself from the multiple jurisdictions that have started to develop their own gaming resort offerings.

In response to these issues, recent rulings, coupled with the new gaming law, are reshaping deposit practices. Specifically, Article 6 of Law No. 16/2022 prohibits junkets and their collaborators from independently providing deposit services, designating concessionaires as the sole entities authorized to store gambler funds, whether in cash or chips. Article 33 establishes the joint liability of concessionaires for the administrative fines and civil liabilities incurred by junket operators unless diligent oversight is demonstrated, underscoring the importance of robust monitoring mechanisms and placing a significant compliance burden on concessionaires to mitigate risks.

Through Article 63, the legislature addressed one of the most contentious aspects of junket-related deposits, clarifying that only game-related deposits trigger the joint liability of casinos. While concessionaires remain accountable for the actions of the junkets they work with, their liability is limited to cases directly tied to gaming-related deposits. This clarification not only reduces the ambiguity surrounding the liability of concessionaires but also incentivizes them to exercise greater oversight over junket activities. In doing so, these reforms also mitigate the financial risks for concessionaires associated with the significant number of ongoing disputes related to deposits not returned by gaming promoters.

Ultimately, the stricter regulation of deposits in Macau’s gaming industry, the increased limitations on gaming promoters’ activities, and the growing expectations for concessionaires to control unwanted behaviors within the industry reflect the shared vision of China’s and Macau’s governments for a transformed gaming sector. These efforts aim to align Macau’s gaming industry with the broader goal of transforming the region into a tourist destination increasingly reliant on revenues from the mass market rather than the VIP junket-driven segment. Achieving this objective requires a well-calibrated approach to joint liability for concessionaires—one that incentivizes them to exercise meaningful oversight of junket activities, a sector likely to play a significantly diminished role in Macau’s gaming market, without overburdening them with liability for actions beyond their control.