Mar 18, 2016 Newsdesk Interviews, Latest News
Macau’s VIP gaming promoters – also known as junkets – are currently not keen on seeing new VIP gaming room space being added to the market in the next round of Cotai casino openings, a spokesman for the sector told GGRAsia.
Kwok Chi Chung (pictured), president of the Association of Gaming and Entertainment Promoters, explained to us that his grouping is still generally pessimistic about the outlook for the Macau VIP sector, and expects more closures of existing junket rooms this year.
“Generally speaking, the junkets are not actively seeking chances to establish new rooms in the opening Cotai casino resorts. The gaming concessionaires are not actively seeking that either,” Mr Kwok explained in an interview.
Mr Kwok is a former member of the Macau Judiciary Police, having joined the body in 1985. He later managed respectively its gaming-related crimes, economic crimes and anti-money laundering divisions until his retirement in August 2010.
He is currently an independent non-executive director of Hong Kong-listed junket investor Jimei International Entertainment Group Ltd and an independent director of Nasdaq-listed junket investor Iao Kun Group Holding Company Ltd.
Commenting on the current structure of the Macau gaming market, Mr Kwok said: “Now you can see the proportion of VIP gaming in the gross gaming revenue has shrunken from a peak of about 70 percent before, to the current level of about 50 percent. For the casinos their strategy is, naturally, to downsize the proportion of VIP gaming in their gaming business.”
“Both the casinos and the junkets are now very cautious on the risk of losses,” Mr Kwok noted. “On the junkets’ side they are not very eager to set up new spots in the opening Cotai casinos because they are thinking whether or not they have enough clients to support the business, and whether or not the investment is worthwhile in relation to their operational expenses.”
VIP room closures
In Macau, casino gross gaming revenue (GGR) – the performance gauge quoted by the Macau government for the local gaming market – decreased by 35.8 percent in the VIP sector in year-on-year terms in the fourth quarter of 2015 to MOP29.59 billion (US$3.68 billion). That is according to data from the local regulator, the Gaming Inspection and Coordination Bureau. For full year 2015, VIP baccarat revenue was down 39.9 percent from 2014.
The bureau has also disclosed that the number of licensed junkets in Macau as of January shrank by 23 percent over the past 12 months. The total, a figure that includes both companies and individuals licensed as junkets, fell from 183 in January 2015 to 141. One additional licence has meanwhile been issued, bringing the total number of gaming promoters to 142 as of February 4, according to the gaming regulator.
The substantial contraction seen in Macau’s VIP gaming operations has been linked to the anti-corruption campaign in mainland China and a softening of Chinese economy. Nasdaq-listed junket investor Iao Kun Group Holding Co Ltd said it does not expect high-roller turnover in Macau to rebound during 2016. Fellow junket investor Hong Kong-listed Neptune Group Ltd also noted in its latest interim report that it believed a downturn in Macau’s casino earnings will continue this year.
“The closures [of VIP gaming rooms] will continue,” Mr Kwok of the Association of Gaming and Entertainment Promoters said, but added, “the conditions will no longer be like what we have experienced in the first half of 2015 when the closures were a lot more frequent”.
The association’s head thinks there is now some stability in the VIP gaming market.
Mr Kwok said the “substantial decline” in VIP gaming revenue in the past year had been partly the result of a more conservative approach by junkets and gaming promoters when issuing credit to high roller players. “The industry has adjusted its credit extension terms, and would avoid getting involved in doubtful debts from clients,” he noted.
The association has suggested to the gaming regulator that it should allow creation of a blacklist that association members could use to identify people with bad debts relating to VIP gambling credit. The government had said it would consider the legal aspects of such a request, Mr Kwok told GGRAsia.
“We want such a list because we have seen problems of a gambler that has already borrowed from three to four gaming promoters, and that each of these promoters were actually not aware of the gambler’s borrowing history,” Mr Kwok said.
“This involves the issue of the gambler’s ability to repay the loan, which certainly impacts our collecting of debts,” he said.
Mr Kwok’s association in 2014 piloted a gaming debtor database exclusively for the use of its members. But the trade body said the sharing of such information was discontinued soon after the database was launched, due to compliance issues relating to Macau’s Personal Data Protection Law.
It was reported by the Macau media last year that Charlie Choi Kei Ian – described to a Macau court as the founder of a website called 99world.com that was launched in open access format and that named and shamed alleged junket debtors – had been given a six-month jail sentence, suspended for two years, by the court for violating Macau’s personal data protection statute and for aggravated disobedience. After the trial, Mr Choi denied being the owner of the website, and said he would appeal against the decision.
“When we first explored the setting up of the [association's] blacklist, or what we call the ‘default risk database’, we had some member gaming promoters that were not willing to contribute to the database because they didn’t want to share their gambling clients’ information,” Mr Kwok said.
“But I’d still say now many of our peers are supportive of setting up the blacklist,” he said. “In regards to how to make it work and who can access the database, we still need time to explore and consult legal opinions. Our basic principle is that we will always abide by the MSAR laws,” stated Mr Kwok.
Mr Kwok said his association agrees with the government’s aim of strengthening oversight of the gaming promoters, but he added that his association was yet to be informed by the government about what the stricter requirements regarding the suitability and financial situation of the city’s junket operators would mean in practice.
“We think it is reasonable for the government to regulate better the gaming promoters and assess their operation capacity,” Mr Kwok remarked.
“We hope that the government can [also] make proper regulation of the gaming collaborators… and [we think] that collaborators should get licensed as well,” he stated.
The city’s VIP gaming promoters have to submit every year a list of the collaborators they plan to work with in the following year. They must also submit at that time the identification documents and the criminal record – the latter being an official record assigned to all citizens rather than necessarily an indicator of past crimes – of the intended collaborators, according to administrative regulation No.6/2002. The information is submitted – via the gaming concessionaires with which the junket operators are registered – to the gaming bureau.
The bureau has the discretion to restrict the number of collaborators the junket operator can work with, or to not approve certain names on the collaborators’ list, the regulation says.
“By definition the collaborators are the ones that introduce clients to gamble in the VIP rooms,” Mr Kwok said, adding, “getting these collaborators’ names on the list basically does not need [currently] any special procedure or strict monitoring.”
Only gaming concessionaires, gaming sub-concessionaires and gaming promoters can issue gaming credit to their clients, according to the relevant Macau law on the regulation of credit for gaming and betting in casinos or other gaming venues. In practice, collaborators or junket agents do directly provide credit to the gaming patrons, Mr Kwok said.
“The problem now is after some collaborators have run into troubles [with gamblers] or got into debt disputes, it’s very hard to chase them [the collaborators],” he said, “It’s very easy to work as a collaborator here. They should be better regulated.”
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