Analysts say his arrest heralds a new era of zero tolerance towards the promotion of gambling in China, where all forms of gambling are illegal.
It has also dealt a blow to the junket industry that will further erode Macau's reliance on high rollers and accelerate a shift to the mass market.
The crackdown on Suncity has direct implications for casino marketing staff, who promote Macau gambling to clients in mainland China.
"After this, now they know that arranging players to come to Macau, promoting gambling in China, even if it’s a phone call in China, could land them in hot soup," said Ben Lee, founder of Macau gaming consultancy IGamiX.
Bloomberg News reported on Tuesday that Suncity Group would close all of its VIP gaming rooms in Macau casinos as of Dec. 1, and cease salary payments for at least one third of its Macau staff. Suncity did not respond to a Reuters request for comment.
Any closures would also harm Macau's embattled economy, according to IGamiX's Lee.
"The loss of jobs, in the thousands, will be a huge deal for Macau," he said.
Cross-border flows of money due to gambling have long irked the Chinese government, and Macau authorities said their investigation has been in train for two years.
Carlos Lobo, a Macau-based gambling consultant, said the crackdown - which comes amid broad regulatory efforts by Beijing to rein in a range of sectors - had only been a matter of time after China ruled in July last year that cross-border fund flows due to gambling were a national security risk.
Miao Shengming, an official with China's prosecutorial agency, told a news conference on Monday that some overseas casinos and online gambling websites primarily target mainland clients, harming China's "economic security".
Chau's junket operations, by some estimates, account for roughly one quarter of gaming revenues in the city known as the Las Vegas of Asia.
The damage to them spells further earnings declines for casino operators, already reeling since the onset of the pandemic as China's quarantine requirements have made it too costly for most mainland tourists to travel to Macau.
Macau logged 4.4 billion patacas ($550 million) in gambling revenue in October, down 40% from a year earlier.
Macau-listed units of U.S. casino operators have plunged in the past two days, with shares in MGM China slumping 15%, Wynn Macau tumbling 11% and Sands China falling 9%.
Macau authorities accused Chau and 10 others of using the former Portuguese colony as a base for an illegal "live web betting platform" in the Philippines that attracted mainland Chinese.
Authorities in the eastern Chinese city of Wenzhou have separately accused Chau of forming a junket agent network that helps citizens engage in offshore and cross-border gambling activities and setting up a company that helps gamblers make cross-border fund transfers.
Suncity Group - which has a broad range of interests in the gambling sector but does not include Chau's junket operations - said Chau, who is both CEO and chairman, intended to resign.
Its stock plunged 48% on Tuesday to a record low after being suspended from trade a day earlier, valuing it at HK$880 million ($113 million). Suncity said its operations would not be impacted in the event that it ceased to have Chau's support.
Part of the Macau investigation involves Russia's Tigre de Cristal resort which is close to China's northeast border and is controlled by Summit Ascent Holdings 0102.HK which in turn counts Suncity as its controlling shareholder. Shares in Summit Ascent slid 63%.
Suncity Group said allegations in the media that Tigre de Cristal was involved in cross-border gaming because it had solicited customers in mainland China were untrue.
Chau could not be reached for comment. The junket operator Suncity has not responded to requests by Reuters for comment.
($1 = 6.3717 Chinese yuan) ($1 = 7.7995 Hong Kong dollars) ($1 = 8.0330 patacas)
(Reporting by Eduardo Baptista; Additional reporting by Anne Marie Roantree and Donny Kwok; Editing by Edwina Gibbs and Angus MacSwan) ((firstname.lastname@example.org; +852 97387151; Reuters Messaging: email@example.com))