The junket business remains important to the Macau market and the recent growth in that segment is adding liquidity to the entire market, says a senior executive at Las Vegas Sands Corp.
“We are happy to see the growth of junket business [in Macau], it adds liquidity and fuels the premium mass [segment],” stated Robert Goldstein (pictured), president and chief operating officer of Las Vegas Sands, the parent company of Macau gaming operator Sands China Ltd.
Mr Goldstein was speaking on Thursday at an investor event called the 33rd Annual Bernstein Strategic Decisions Conference, held in New York City, in the United States.
Commenting on the growth of casino gross gaming revenue (GGR) in Macau, the executive said that junket play was still important for the mass-market segment as it created what he characterised as a trickle-down effect to premium mass; a segment of gambling customers that are required by the house to bet using cash, rather than via credit as happens with high rollers.
“The junket business is important beyond the simple profit perspective,” said Mr Goldstein. “Part of the success in premium mass is that the junket liquidity and junket success fuels premium mass play because the two do cross over.”
He added: “I think all [gaming] segments in Macau are rising. I would like to see mass grow stronger, premium mass is very strong and junket looks good. But the whole market feels good and is in a good growth pattern.”
Casino GGR in Macau rose by 23.7 percent year-on-year in May, to MOP22.74 billion (US$2.83 billion), according to official data published on Thursday. It was the 10th consecutive month of GGR growth in the market, and the biggest increase in year-on-year terms since February 2014.
“We believe the recovery we are seeing [in Macau] is both sustainable and can grow from here,” said Mr Goldstein in his Thursday’s remarks. “In Macau, the mass and premium mass drive the profitability. It’s not a junket market for us,” he added.
Neptune Group Ltd, an investor in the Macau VIP gambling market, announced on Friday that a unit of Sands China had cancelled the right of one of its junkets to run 14 high roller tables at the Venetian Macao casino resort, with effect from June 30, 2017. The Neptune filing to the Hong Kong Stock Exchange didn’t specify any reasons for the decision.
Brokerage JP Morgan Securities (Asia Pacific) Ltd said in a Thursday note on Macau that what it termed some “mid-sized” junkets seemed to have been gaining market share in recent months. But it added “sustainability is something to be mindful of … as smaller junkets tend to carry higher credit/collection risks given their relatively loose credit policy,” compared to the bigger gaming promoters.
In Thursday’s conference session, Mr Goldstein also mentioned the need to invest in the refurbishment of the group’s Macau property portfolio, including the 3,000-room, US$2.7-billion, Parisian Macao, which opened as recently as September 2016.
The executive said that while the company was “delighted” with the ramp up of business at the Parisian Macao, the room inventory would need to be reconfigured to appeal to upper-end mass gamblers.
“We didn’t give it enough quality suites to compete for premium mass customers. Demand from premium mass customers is very strong,” said the Las Vegas Sands COO. “The major capex [capital expenditure] in that building will be to add some suite capacity.”
The executive additionally said that Sands Cotai Central needed some refurbishment and that the company was already working on some plans to create fresh consumer interest in the property.
“The property [Sands Cotai Central] could and should be a lot stronger,” said Mr Goldstein, adding that the firm would also make improvements to the gaming space at the resort. “It [Sands Cotai Central] is an asset that can grow but we need to rethink it,” he said.
Mr Goldstein also commented on the performance of the Singapore market, where the company operates the Marina Bay Sands resort. The executive said it would be a challenge to see strong growth in the next few years in that market, largely because of a lacklustre VIP segment.
The COO said the company would like to have more space for hotel rooms and other amenities in Singapore “if the circumstances are right”. “That’s a government decision, not ours,” he added.
The executive confirmed that a process to sell part of the shopping mall at Marina Bay Sands was still ongoing. According to previous comments by Las Vegas Sands’ management, the firm would expect to get between US$3 billion and US$3.5 billion from the sale of a 49-percent stake in the shopping mall.
Japan solo bid preferred
During the conference, Mr Goldstein said the company anticipated there would be more clarity by the year 2018 regarding the possibility of the group bidding for a casino licence in Japan. Las Vegas Sands has shown strong interest in investing in that country.
Japan is part way down a path to creating a legal and regulated casino industry, and the government there is currently drafting a second piece of legislation on specifics including how casinos are administered and regulated. A number of investment analysts have mentioned the possibility that foreign firms might have to link – in likelihood as minority partners – with Japanese firms in order to bid jointly for a Japanese casino licence.
The Las Vegas Sands COO on Thursday said the company would prefer a solo bid for a Japan casino licence.
“In the past, we hadn’t had partners in Macau or Singapore. That’s the approach we prefer,” said Mr Goldstein. “We don’t need capital and we are good and competent developers on our own, so I’m not sure what a partner would bring to the table; but if it is mandated by the Japan government we will respect that and act accordingly.”
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"The MSAR [Macau Special Administrative Region] Government is always maintaining its policy not to have imported labour to work as dealers. This position has not changed"
Lionel Leong Vai Tac
Macau’s Secretary for Economy and Finance