Macau might see further shrinkage in the number of licensed junkets, as the mid- and small-sized ones still face challenging operating conditions and could eventually exit the local VIP gaming market, said Kwok Chi Chung, the head of a junket-sector trade body, in comments to GGRAsia.
Mr Kwok is president of the Macau Association of Gaming and Entertainment Promoters, representing the majority of the local junket brands. They are the entities or individuals that coordinate the supply of high-value, mostly mainland Chinese, gamblers to the local market and arrange for the issuing of credit, and collection of money owed from gambling losses.
The latest available figures showed that the aggregate of licensed gaming promoters fell from 109 in January 2018 to 100 this year, according to information published by the Gaming Inspection and Coordination Bureau.
The regulatory framework for the sector is also in a period of transition, with moves afoot by the city’s government to increase the capital deposit required by newly-registered junkets; and plans for a clampdown on the previous practice of unregulated capital deposits being placed with junkets by members of the public.
“In future we may see even fewer licensed junkets, because the operating environment now gets tougher – especially for those small- and mid-sized junkets,” Mr Kwok remarked to us in a phone interview.
“Some of the operational difficulties of these [small- and mid-sized junkets] stem from more challenges met in collecting [gambling] debts, or simply the quality of their clientele is not good. So they find it difficult to meet the [revenue] target imposed by casino operators,” Mr Kwok added.
The junket trade body representative said he would not be surprised to see more mid- and small-tier junkets struggling to keep their licences in the near future.
Non-junket high stakes
Casino operator Wynn Macau Ltd is pushing ahead to renovate its Wynn Macau casino hotel property in Macau peninsula, in a bid to shift its focus to premium mass side of the gaming business. Matt Maddox, chief executive and president of the firm’s parent company Wynn Resorts Ltd, gave the information in the parent Wynn Resorts Ltd’s fourth-quarter earnings conference call. Mr Maddox also noted during the call that the group’s Macau operations had seen a “decline” in mid-tier junket business, but the city’s “three major junket operators” still appeared to be “healthy” with no reported liquidity issues.
“If the casino operators choose to expand further their own in-house VIP or high-limit play, it certainly will spell even more pressure on some mid-tier junkets,” said Mr Kwok.
The junket trade body representative also highlighted the possible economic headwinds that might hurt VIP play in the city.
“The negative impact from the uncertainties surrounding the U.S.-China trade war may be more evidently felt in the coming months. Also, Macau’s latest tobacco control rules banning smoking in VIP gaming zones is also a negative, which is especially so for those that run in smaller [gaming] venues where they still have no approved smoking lounges.”
Mr Kwok reckoned the new smoking control rules in casinos could discourage high rollers’ frequency of play. Nonetheless a senior Macau government official this week said the authorities didn’t currently have enough inspectors to enforce the tightened rules.
VIP gross gaming revenue (GGR) in Macau for full-calendar 2018 was MOP166.10 billion (US$20.7 billion), or 54.8 percent of all Macau casino GGR for the period. But Mr Kwok believed the proportion of VIP GGR would continue to shrink in the coming year.
“Now it is all about the mass [gaming] story…even when people talk about the benefits of infrastructure like Hong Kong-Zhuhai-Macau Bridge, it stimulates more mass-market visitors to here, and the volume of mass play,” Mr Kwok remarked, Meanwhile, the proportion of VIP earnings [of overall GGR] will just get slimmer in time.”
Mar 08, 2021Francis Lui Yiu Tung (pictured in file photo), vice chairman of Macau casino operator Galaxy Entertainment Group Ltd, says he anticipates that the expansion in mainland China, Macau, and Hong...
“Construction work is progressing smoothly and even though the Covid-19 outbreak has impacted our original timeline, we remain committed to this groundbreaking project"
Property general manager of City of Dreams Mediterranean