Wynn Macau Ltd has stated that the VIP customers sourced by junket operators are still important to the company’s revenue. That is why the Macau concessionaire has stated that it must seek alternate options that will allow it to develop a solid relationship with them.
Wynn Macau Confirmed Ceasing Operating Junket Rooms at the End of 2021
The COO and vice chairman of Wynn Macau, Linda Chen, spoke to the media in December 2021 and stated that the company will cease all activities with junket operators by the end of the year. These remarks marked the first time one of the Macau casinos publicly announced that it will cease all operations with junkets.
As for the third-party VIP rooms, Chen said that they will be converted into mass-market venues for purposes other than casino gaming. The fallout with junket operators was the result of the arrest of Alvin Chau, Suncity’s boss.
Wynn Macau published its annual report on Friday and in it, the company confirmed that the premium segment remains a priority, but added that it does not have any agreements with gaming promoters.
As the report states, Wynn Macau has historically depended on partnerships with gaming operators to generate revenue, but now, the revenue and growth of the company “could be adversely affected.”
The Competition for Premium Customers in Macau Is Massive
Macau concessionaires are in tight competition for premium customers, as the report outlays. Wynn Macau stated that the potential gaming revenue will be hit and that is why the company must search for alternative ways to develop “relationships with premium customers.”
Certain risks connected to the operations were also outlined. Wynn referenced Macau’s Court of Final Appeal’s decision from November. This ruling states that casino concessionaires will be jointly liable with promoters.
The annual report states that the company may face similar risks in the future. It explains that if any of Wynn Macau’s former promoters violate the gaming laws of the city while on the company’s premises, authorities are highly likely to take action against Wynn Macau as well. In doing so, Wynn Macau will face sanctions and its reputation will be hit.
Moreover, the government of Macau has stated that it will amend the city’s gaming laws connected to junket partnerships. According to the government, revenue sharing agreements will be banned and junket cooperation will be limited. Interestingly enough, experts claim that Macau’s casinos may be holding up to $6.4 billion in frozen junket funds. Macau’s government may end up seizing the funds.
This may be a massive hit to operators in Macau due to the fact JP Morgan analysts claim that the cash reserves of the operators are limited, especially for SJM Holdings.