The Macau junket sector is in talks with the city’s casino concessionaires in an effort to “level” the VIP-market playing field in terms of what incentives can be offered to high-value players.
The updated gaming regulatory system, coinciding with the new Macau concession system that started in January 2023, severed the traditional link between the city’s junket trade and issuance of player credit. But veteran junket-sector boss U Io Hung (pictured) told GGRAsia in an interview, that there is still an important role for junkets: having access to a network of contacts to bring to Macau casinos, players that might not otherwise be recruited by the industry.
But for that to happen, there needs, he said, to be a rebalancing of business ground rules applicable to the house, and to Macau’s licensed gaming promoters, commonly known as junkets. Mr U is president of the Macau Gaming Promoter Professionals Association, a trade organisation.
A key area is in terms of ‘rolling chip commission’, he stated. In the context of this debate, that refers to the cash incentives that the house and junkets can respectively offer to players.
Mr U observed that presently the house is able to offer players a capped limit of 1.25 percent of rolling chip value as “commission”, when the house manages them directly.
Under Macau’s updated gaming regulatory framework, the junkets cannot ‘manage’ players directly in terms of things such as credit issuance, but instead can earn a commission from the operators in return for hosting the players in junket rooms in casinos. The problem, says Mr U, is that the 1.25 percent commission junkets can theoretically earn from the house, is subject to a 5 percent witholding levy by the local government, resulting in a net of 1.1875 percent in the junket’s pocket.
Even to make a modest living, the junkets can afford at most to offer players they host only 1.15 percent; i.e., potentially 10 basis points lower than the operators can offer players willing to join a direct VIP programme.
The city’s government has shown no sign of offering relief on the burden of the withholding levy, despite lobbying from the junket sector. In a written reply to Mr U’s trade body in May 2023, the government said it had no plans to modify the rule.
Mr U would like to see the industry voluntarily moderate its own rolling chip commission rate so that junkets can compete.
“We hope that we can go [down] to 1.13 percent [in rolling commission rate]… all together, so that we all have a more levelled [trading] environment,” Mr U told GGRAsia.
“If they are able to lower their [rolling chip] commission rate” for house-managed VIP gaming patrons, “they can profit more…. while for us, we wouldn’t need to face such vicious competition against the direct-VIP segment as we are facing now, and we’ll be able to retain some profit,” he added.
Mr U told GGRAsia that he and his colleagues were relieved that another pain point for the licensed junkets – the presence in the market of informal, unlicensed agents – was being investigated and controlled by the city’s regulator, the Gaming Inspection and Coordination Bureau.
Mr U stated: “Nominally, these so-called ‘agents’ are programme players. But in fact, they have been engaging in activities that involved hosting a number of other players within their own account.”
Ruses involved certain individuals registering themselves with a casino as a house rolling chip programme player, but then reselling some of their chips to other patrons.
Such people had also been splitting their own play rewards offered under the programme with other patrons, said Mr U. Other industry sources had told GGRAsia of similar patterns among such shadow ‘agents’.
But Mr U said regulatory action against them had “intensified” during the summer. “Now basically you cannot see them any more at the [properties] of the six casino concessionaires,” he stated.
