Paulo Martins Chan, the director of Macau’s Gaming Inspection and Coordination Bureau, says the regulator is being cautious in the way it approves licences for junket operators.
“We are approving [licences] on a case-by-case basis. Of course, we want to keep those [junkets] that are financially healthy and capable,” Mr Chan (pictured in a file photo) told reporters on Wednesday.
Mr Chan’s remarks were made on the sidelines of Global Gaming Expo (G2E) Asia 2017. The three-day trade show and conference – focused on the Asian gaming industry – runs until Thursday at the Venetian Macao.
Mr Chan confirmed that the regulator has started auditing the credit issuance records for the city’s 126 licensed VIP gaming promoters. The regulator had told GGRAsia in April that it would assess “over 60” junket operators in the first tranche of audits.
“We have audited about 40 junkets,” the head of the regulator said on Wednesday. “Some of them are in a good [financial] position, while others have to show some improvement – we have told them to improve their accounting system.”
A number of investment analysts have identified strength in high roller gambling as an important factor in the expansion of casino gross gaming revenue (GGR) in recent months. They have also noted that some mid-tier junkets seem to have been gaining market share in Macau’s VIP gambling segment.
Brokerage JP Morgan Securities (Asia Pacific) Ltd however cautioned about the sustainability of these firms’ operations, “as these mid-sized junkets tend to have relatively loose credit policy”, compared to the bigger gaming promoters.
Casino GGR in Macau stood at MOP83.64 billion (US$10.43 billion) for the first four months of 2017, a year-on-year expansion of 13.8 percent, according to official data.
Mr Chan said that Macau’s gaming market has found “a good balance” between VIP and mass-market revenues. In the breakdown for first-quarter 2017, VIP revenue as a proportion of all casino GGR in the period stood at 55.9 percent. The mass-market segment saw its third consecutive quarter of expansion in the January to March period, up by 8.5 percent from the prior-year period.
The head of the regulator was also asked about the possibility of the Macau government reviewing the gaming tax regime, currently at 39 percent of GGR.
“As of now we don’t have any plan to revise the taxation regime but of course everything will have to be considered,” said Mr Chan. “At this stage we are trying to collect more opinions from different sectors so that in the future we can make a better decision.”
Mr Chan additionally said that the government would announce details about the possible refreshment of Macau’s six gaming concessions “in the proper time”. He declined to disclose any timeline. Macau’s six casino concessions expire between 2020 and 2022.
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”Continued negative coverage of the Abe administration, coupled with political losses for the Liberal Democratic Party ... may reduce support for the gaming agenda, which already has only limited public support”
Analyst at brokerage Sanford C. Bernstein