On December 10, when Macau-based junket operator Suncity officially went out of business, it seemed to mark the end of the city’s VIP sector, which brought high-rolling gamblers to the casinos’ VIP rooms.
But the VIP promotion business could survive in some form, provided junket operators abide by Chinese law and avoid even the perception of impropriety, cross-border gambling or capital outflow.
According to Inside Asian Gaming, for years Suncity was “the undisputed king of VIP casino gaming promotion throughout Macau, Asia and the world.” Its demise followed the November arrest and imprisonment of founder Alvin Chau, who was charged with criminal association, illegal gambling and money laundering.
Casinos in Macau were quick to distance themselves from VIP promoters, as did operators in Australia and the Philippines. When all Suncity rooms shut down, investment bank JP Morgan said the once-dominant industry would likely fall to “near-zero” levels and the government’s crackdown on credit extension, FX transfers and so on for mainlanders would “cripple” the junkets’ ability to bring VIP players to any jurisdictions, including Macau.
But at a press conference last month, Macau Chief Executive Ho Iat Seng said the government never intervened in the relationship between casinos and junkets and did not order VIP gaming rooms to close.
Ho conceded that junkets had become a “problem” in Macau, possibly a reference to Chau’s alleged crimes, which also included the promotion of gambling on the mainland. But the sector had been in decline for years, falling from several hundred junket operations in 2013 to just 85 at the start of 2021.
Asked if the target of MOP130 billion (US$16.2 billion) in gross gaming revenues (GGR) is realistic given the loss of junkets, Ho said the goal remains the same, and continuing Covid-19 infections could have a much greater impact than the loss of junkets.
Meanwhile, in the Philippines, Asia Gaming Brief reported that junket investor Rich Goldman Holding has terminated its profit-share agreement for a VIP room at the Solaire Resort and Casino in Manila, citing a challenging operating environment and intense competition.
Despite the challenges, Edmund Loi Hoi Ngan, associate professor of the Social, Economic and Public Policy Research Centre of Macao Polytechnic Institute, says junkets may rebound in the future in some jurisdictions.
“After all, Southeast Asia still allows cross-border gambling,” he said. “Countries like Singapore, Thailand, Malaysia, South Korea and Japan are not opposed to cross-border gambling. The ways for junkets are not completely blocked, as long as they stay away from Mainland China. I think the bottom line is very clear.”
Loi added that Macau’s VIP segment may also return once the amendments to Macau’s gaming law are confirmed.
According to GGRAsia, Daiwa Capital Markets Hong Kong agreed that Mainland China authorities may have no problem with junkets acting as recruiters of casino players from outside China. It simply has to look at Singapore’s International Market Agent system, in which licensed gaming promoters bring high-value players to the market’s two casinos, Marina Bay Sands and Resorts World Sentosa.
A report from analysts Andrew Chung and Terry Ng described the rules for the Singapore agent system as “some of the most stringent… among worldwide gaming jurisdictions,” which would satisfy Beijing. Singapore’s agent application process is “significantly more complex, with more extensive probity checks,” they wrote.
The Daiwa analysts said target markets could include Chinese nationals with permanent residency in either Hong Kong or Macau and international VIPs in the Asia Pacific who typically play in Singapore, Australia or South Korea.
However, in comments last year to the Macau Daily Times, Asian gaming consultant Carlos Lobo said if the Macau government makes junkets stop offering credit to clients, they will have to “operate as a travel agency, through activities such as receiving fees for bringing rich clients to casino operators, rather than receiving commissions from VIP gaming rooms which has been the main business model for years.”
