The world’s largest casino junket market could soon disappear. Reports this week claimed that Macau has called for a halt to junket operations. The SAR has also reportedly ordered junkets not to loan money to VIP clients.
The End of a Junket Era in Macau
Macau’s casino concessionaires could end all contracts with junket proponents, a move that would end the junket industry by the end of the year. According to Inside Asian Gaming (IAG), over the past 24 hours, talks are ongoing at all six concessionaires. The general theme is that all existing agreements will be terminated with junkets by December 31.
IAG also received a letter from a concessionaire to a junket canceling their agreement. This was in response to a Macau Gaming Inspection and Coordination Bureau directive (DICJ, for its Portuguese acronym), which prohibited the issuance of credit.
IAG is aware that some concessionaires are waiting and watching, hoping that other concessionaires will be the first to jump. However, it seems now likely that all six concessionaires will announce their decision in a short time.
Each concessionaire is limited by their individual agreements with junkets, but the pending January 1 deadline for licensing junkets by the DICJ may play a part.
Less Gaming Income for Macau
Macau will likely have a lower gaming tax income than the level of public spending it has usually pledged. This is if junket-based VIP betting no longer makes a significant contribution, according to several local scholars who commented to GGRAsia.
Suncity Group’s Macau-based VIP gaming venues, which were previously described by investment analysts to be the biggest VIP junket promoter in Macau, have been closed since December 1. This was in response to the arrest of Alvin Chau, the former boss of the junket group, on suspicion of organizing illegal gambling for customers coming from mainland China.
The story was published online at the same time that unconfirmed reports surfaced that Macau’s casino operators had stopped dealing with junket companies in the city.
Antonio Lobo Vilela, a former advisor to the local government, said there was a strong possibility that the VIP segment’s gaming taxes in Macau would be “close to zero” in the future.
Too Little Transparency Over Junket Activity
Ricardo Siu Chi Sen from the University of Macau, who has research interests in Macau’s gaming industry and tourism sector, shared a similar viewpoint.
He told GGRAsia, “The Practice of the [junket VIP gaming] business model is largely controversial in terms of its low transparency; the ways that the gaming agents – junket operators – approach the patrons, provide and collect gaming credits” and how they manage “the flow of the gambling funds.”
Siu added, “To construct an internationally approved, modern casino tourism jurisdiction which will also gain the long-term support by the Chinese government, the phasing out of this [junket VIP gaming] segment seems inevitable.”
Until recently, VIP gambling accounted for a large portion of Macau’s annual gaming tax revenue. In 2019, gross gaming revenue (GGR) generated by VIP gambling was MOP135.23 trillion ($16.83 billion). This is 46.2% of the MOP292.46 billion city-wide casino GGR.