Macau’s new law regulating the issuance of credit for casino gambling – in effect from August 1 – is likely to weaken the business appeal of the city’s junket operators to high-roller players, and such customers might be lost to the Macau casino sector as a whole.
So suggested veteran junket boss U Io Hung, in comments to GGRAsia. Mr U is also the president of the Macau Gaming Promoter Professionals Association.
The law Mr U refers to, titled “Legal regime of credit concession for games of chance in casinos”, says casino concessionaires are the only entities permitted to provide gambling credit to patrons in the Macau market.
Until the new law came into effect, Macau’s licensed junkets had been allowed – in their own name – to extend credit to gaming patrons, provided the junket concerned had signed a contract with its partnering casino concessionaire specifically for that purpose.
The new rules “definitely have an impact” on local junkets’ ability to appeal to high rollers that opt for credit play, Mr U remarked to GGRAsia.
“One of our biggest points of appeal, in the old days, was our ability to lend [players] money,” he stated.
Traditionally, junket operators also often acted as the “guarantor” for their clients’ repayment of gaming credit, the veteran junket boss noted.
As the new regulatory framework no longer allows this business model, then not only local junkets, but also the Macau casino concessionaires themselves might face, in the “worst” case, the loss of some high-roller patrons to other regional gaming jurisdictions, Mr U suggested.
“Under the current rules, we have to deliver the players’ information to the concessionaires; and the concessionaires decide whether to issue markers [to the patrons] or not,” said Mr U.
Patrons that find the vetting process by the casino operators “troublesome” may choose simply to skip gambling in Macau, he added.
“Big clients are the easiest to lose. They are rich and they have high mobility,” Mr U told GGRAsia.
As permitted by the new law on issuing credit for gambling, junkets can still extend credit to patrons as the agents of their respective partnering casino concessionaires. However, in the capacity of agent, the junket is not actually the lender. The credit relationship is only between the casino concessionaire as the lender, and the gaming patron as the borrower.
Under the updated legal framework, each of Macau’s licensed junkets is only allowed to partner with one among the city’s six casino concessionaires.
The junket operators are allowed to earn commission for their gaming promotion service, but are banned from sharing casino revenue in “any form” with the casino concessionaire with which they work.
Several Macau casino operators have given, in recent financial results, some commentary on their respective gaming credit issuance policy. There has been mention of designated teams to conduct background checks on gaming patrons, and assess whether they are creditworthy.
But in terms of the dynamic between casino concessionaires and gaming promoters – the official name in Macau for licensed junkets – Hong Kong-listed MGM China Holdings Ltd spelled out in its interim results filing that since August 1 it had “discontinued the credit operations” with them. That was the date the new gambling credit law came into force.
Macau presently has 24 licensed junket entities, according to the latest available public information from the local casino regulator, the Gaming Inspection and Coordination Bureau. Most of these entities involve people that have been in the junket trade for years, Mr U remarked to GGRAsia.
