There are no triads in Macao

Yeah, and if you believe that, boy, do I have a dandy bridge in Brooklyn to sell you. Not only are triads alive, well and operating in Macao, they succeeded in infiltrating Sands Macao, according to a detailed investigative report by Reuters.

At the center of the drama is alleged triad leader Cheung Chi-tai, who is not only accused of being a frequent and ominous presence in Sands’s VIP rooms but is incontrovertibly a profit participant in the casino. His company — I’m not making this up — Jumbo Boom Holdings invested in Neptune Holdings, which in turn lent capital in VIP-junket operators in return for a cut of their profits. Although Reuters doesn’t explicitly connect the dots, the connotation of its report is that Cheung believed a Sands dealer (presumably one of those in the Chengdu room that Cheung allegedly oversaw) was colluding with “God of Gamblers” Siu Yun-Ping to cheat the house … i.e., Cheung.

The dealer in question was targeted initially to have his arms and legs broken before Cheung supposedly upped the ante to outright murder. However, a conspirator “dropped dime” to Hong Kong authorities, leading the conviction last year of five men on a variety of charges, including solicitation of murder. Cheung, though, was never charged.

At bottom, this is the sort of rank villainy with which Macao was routinely associated during the years of Stanley Ho‘s casino monopoly. But what are the real world consequences for Las Vegas Sands or its Chinese subsidiary of being ignorant of what was happening in its VIP rooms? Cheung’s indirect investment in the casino was concealed by a couple of degrees of separation. But the alleged presence on-property of the supposed leader of Wo Hop To triad could be considerably more problematic.

Sheldon Adelson‘s expansion efforts in Florida and Massachusetts are suddenly in serious danger of going “Poof!” (Anti-casino groups are going to have a field day with Sands’ apparent indiscretion.) Uncomfortable grilling from regulators is certain to occur in Singapore and likely in Pennsylvania.

As for Nevada, even if a direct relationship between Cheung and Sands could be demonstrated, the Nevada Gaming Commission would be unlikely to pull Sands’ license when thousands of jobs are at stake. The very worst-case scenario would involve a few mid-level heads rolling and perhaps the payment of a substantial fine … and it’s far more likely that Adelson will get off with a mild chastisement. Most importantly for him, he’s free and clear in Macao. Casinos there are not held responsible for junketeers’ misdeeds.

One queasy-making passage in the Reuters report sheds light on the tenebrous relationship between junketeers, casinos and VIP players. If the latter stiff the casino, it’s shit out of luck. If it’s the junketeer (who’s allowed to extend credit) who gets shafted, woe betide the stiffer. “[Junket operators] assume responsibility for collecting on their loans — at times indelicately, authorities say.”

Whenever there’s a huge increase in Macanese gambling revenue, as is happening currently, the inevitable corollary is a governmental crackdown of some sort. In this case it’s a decree that only 500 more tables will be permitted through 2012. Trouble is, the Macao regime has already approved several projects that will take it over its self-imposed 5,500-table limit — by as many as 800 tables, perhaps more. Looks like somebody didn’t think this through carefully.

Sands China President Steve Jacobs‘ reaction was “the Macao government is sincere in its efforts to diversify and that it recognizes the integral part sites five and six play with regards to growth in hospitality, business, and leisure tourism.” Which is Sandsspeak for, “We’re sure they’ll give us the number of tables to which they’ve already agreed and if they don’t …”

Stanley Ho’s SJM Holdings not only minimized the effect of a table game freeze, it pooh-poohed the importance of Adelson’s beloved Cotai Strip™ for good measure. Trust Ho’s people to know when Adelson is down, however momentarily, and put the boot in accordingly.