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The Economics of Casinos

By Saksham Gupta
Kulachi Hansraj Model School

When you think of a casino, the first thing that comes to your mind is rich people with wads of cash having the time of their lives, and over the top, glitzy Las Vegas casinos with copious amounts of intoxicants. Well, your expectations are going to be shattered. Gone are the days of running a small-time business as a front for converting black money to white; Casinos are the hottest spot of money laundering for elites across the globe.

You may want to launder money for a myriad of reasons: protection from pesky tax authorities, detachment from the unstable local currency, or just from prying eyes of an ugly divorce settlement.

You see, China has laws in place that only allow 20,000 yuan ($3,200) to be moved out of Mainland China at once and only $50,000 in a year. This is especially problematic if you are a Chinese Billionaire who wants USD for any reason. Fortunately for you Macau, called the “Vegas of the East”, is THE place to be for converting your hard-earned Chinese Yen to US Dollars. Macau’s gambling arena is the World's largest, 5 times bigger than Vegas, with 10 times as many hotel rooms.

To accomplish this, what these HNIs do is contact a ‘Junker’ (think of this as an agent) who takes their money in Mainland China and transports the amount to Macau, where gambling is legal. Then these Junkers play a hand or two and “report” any minuscule profit or loss, along with the main amount as ’revenue’. Now the casino gives you the option to take your winnings in any currency you like, and since Macau is in a Special Economic Zone, you can get them in US Dollars. Congrats! You have now successfully evaded the draconian laws and have given your money freedom to fly.