China’s move to criminalise any efforts to organise and solicit mainland residents for the purposes of gambling abroad, is “definitely not good news” for Macau’s junket sector, said Luiz Lam Kai Kuong, a veteran Macau junket investor, in comments to GGRAsia. That was because it came amid the backdrop of already-challenging trading conditions that predated even the Covid-19 pandemic.
“This is going to spell more obstacles for [Macau’s] junket trade,” Mr Lam told GGRAsia.
He added there had already been what he termed “punitive” actions by the mainland authorities against junket agents that were identified as having helped mainlanders with hotel bookings or gaming credit for use outside that jurisdiction.
“Before the pandemic happened, Macau’s junket sector had already been seeing a declining number of ‘old’ [mainland] clients – even during major festivities like the autumn Golden Week – for the past three years,” Mr Lam added. He was referring latterly to a Chinese national holiday period encompassing the National Day celebrations, and which takes place at the start of October.
He stated: “The reason could be that such clients’ wealth was already dwindling: in some other cases we heard people were warned by Chinese authorities about their gambling activities.”
Brokerage Sanford C. Bernstein Ltd suggested in a Wednesday note that what it termed “overseas casinos” – i.e., places beyond Macau – that rely heavily on junket trade for revenue, had “much to worry about”, against the background of China’s apparent policy focus of limiting its nationals gambling abroad.
But the institution saw that as potentially a positive thing for Macau, a special administrative region of China, and the only part of the country where casino gambling is legal.
The brokerage added: “We believe this is a continuation of policy in China of trying to limit gambling in foreign countries and reducing associated money outflows to other countries.”
“In the longer run, we see China’s actions of trying to stamp out illegal online gambling (which has become a severe problem in China) and making it more difficult to gamble overseas, as benefit to Macau, as it is viewed as a safe place to go for gaming activity within China,” wrote Sanford Bernstein analysts Vitaly Umansky, Tianjiao Yu and Kelsey Zhu.
Junket veteran Mr Lam told GGRAsia he had concerns that – in the context of China’s apparent general tightening of scrutiny on gambling – the only things that Macau junket operators would be able safely to promote to their mainland-based clients, would be their non-gaming services.
But Sanford Bernstein stated in its note: “While the new law that may come in is more specific” than the previous legal framework, “we do not see a complete elimination of the junket system in Macau.”
But the analysts added: “We see a continued shift to premium direct (direct VIP) and premium mass occurring in Macau and likely accelerating.”
The brokerage also suggested the mass gaming segment would remain the “key driver” of “long-term value creation” for Macau’s gaming sector.
Junket boss Mr Lam said he “would not be surprised” to see the tally of the city’s licensed junket operators dwindle further, to below 80 by the beginning of next year, due to the disruptive impact of the pandemic on the high-roller trade, and China’s apparently-greater scrutiny of money transfer outside the mainland. The total number of licensed junkets in Macau – either entities or individuals – fell from 100 in January 2019 to only 95 in January this year, according to the city’s regulator.
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"Unfortunately, I cannot come to Macau nor can any of my team. The global pandemic has created a situation that is very difficult for all of us … I am very hopeful that we can come to Macau to bring back a reimagined House of Dancing Water"
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