Over the past year, the total number of Macau licensed gaming junkets has declined by 45.9%. According to the Gaming Inspection and Coordination Bureau (DICJ, for its Portuguese acronym), this is the ninth consecutive year that the number of licensed junkets has declined in Macau. More exits are likely leading up to the implementation of the city’s new gambling laws later this year.
Macau Junkets Becoming Obsolete
According to an updated list of licensed operators published today by the DICJ, the total number of junkets dropped from 85 to 46 since January 2021. A year earlier, the number had been around 160.
Some of the most prominent junket brands in Macau, Tak Chun International, Meg-Star International and Golden Group, are still licensed entities. While the DICJ didn’t provide specifics on why the number has dropped, the reason for the decline is obvious.
After Suncity Group’s VIP rooms closed, casinos stopped working with the junkets. Wynn Macau, Melco Resorts and others have already confirmed their breakup, and other operators will do the same soon.
In addition to the splits, some independent junket operators already departed as a result of the decrease in traffic following the COVID-19 pandemic. Looking forward, with new gambling laws coming and more restrictions on their way, junket operators have less incentive to continue.
The Old Junket Days Are Over
Macau’s casino junket sector has been under the spotlight ever since Alvin Chau was detained in November, bringing Suncity’s reign to an end. Suncity was previously the biggest VIP operator in the city, controlling around 40% of the market.
A bill amending Macau’s gaming law includes new regulations for junkets. The document states that each Macau junket can only work with one Macau casino concessionaire in the future.
Junkets won’t be allowed to use any part of a casino as a means of operating their own operations. The draft bill, which has already received one legislative approval, also states that they will be prohibited from sharing casino revenue in any form with any gaming concessionaire with which they work.
Junkets in Macau have always been given incentives to attract players to casinos. These include a share of revenue or a commission on rolling chips turnover. The former is usually capped at 1.25%.
The VIP gross gaming revenue (GGR), which accounted for almost 32.8% of Macau’s total GGR in 2021, was MOP28.49 billion ($3.55 billion). According to official data, this was a decrease of 43.5% of the market share from the previous year.
Only 25.7% of Macau’s total GGR was delivered by VIP in the three months ending December 31. This is going to continue to decline, not only because of the exit of junkets but because casino operators are changing their strategies. Mass-market gaming is the new target, with significantly less attention being given to the VIP segment.