Authorities in Macau have ordered that gaming operators in the city may partner with a limited number of junket operators in 2024. The cap was enacted to give officials more control and oversight of the VIP industry. An aggregate of 50 licensed junkets will be permitted to do business in the Chinese gaming enclave.
However, according to Macau Business, only 36 such companies are currently registered to conduct junkets in the city—a startling drop from the high of 200-plus that flourished in Macau in 2013.
Junkets make their money by facilitating casino visits by high rollers. They do so by arranging credit lines for big-spending gamblers; organizing accommodations and transportation; and collecting on losses.
Of the city’s Big 6 gaming concessionaires, Sands China and SJM Holdings were awarded the highest number of junket promoters under the new framework; each will be permitted to work with up to 12 junkets next year.
MGM China Holdings and Melco Resorts & Entertainment each may form eight partnerships. Galaxy Entertainment Group and Wynn Macau bring up the rear—each can work with five licensed junket companies in 2024.
Macau’s overhauled junket law, which took effect in 2022, also capped the commission rate for VIP junkets at 1.25 percent of rolling chip turnover, and required them to pay a monthly 5 percent tax on those commissions. The law also banned junket operators from sharing casino revenue “in any form” with gaming concessionaires. Junkets also are prohibited from hosting VIPs in high-roller lounges under their own brands.
In another big change, starting next year a maximum of 250 sub-agents or junket “collaborators” may work in the once-dominant sector. According to GGRAsia, as of September 15, there were seven registered collaborators in the Macau market, with one additional licensee under review.
In related news, market-wide gross gaming revenue (GGR) in Macau reached MOP12.0 billion (US$1.49 billion) in the first 24 days of September, according to estimates from JP Morgan Securities (Asia Pacific) Ltd.
“This is well within expectations, allowing us to keep modeling MOP14.5 billion to MOP15.0 billion GGR (or MOP480 million to MOP500 million per day) for September,” wrote analysts DS Kim, Mufan Shi and Selina Li.
The team also said that it anticipates “a pretty upbeat sentiment” for the October Golden Week period, which started September 29 and continues through October 6. They’re “expecting Golden Week to print the highest GGR” since Macau fully reopened to visitation on January 8, following three years of pandemic-related shutdowns.
The analysts added, “We continue to expect industry mass GGR to hit 100 percent-plus of pre-Covid-19 levels for October Golden Week.”
The team also suggests that criminalization of illicit money exchanges in the city will not have a serious impact on GGR. Last month, Macau Secretary for Security Wong Sio Chak said that in the future, perpetrators could be subject to criminal charges for activities that he said have led to “other crimes in the past, such as scams, illegal detainment, assaults and even murders.
“Legislation on illegal gambling law is now underway,” Wong said. “The police have the intention to criminalize illegal money exchange offenses related to the gaming industry, or to assess that if criminalization fails to solve the problem, the possibility of raising the fines.
“The police will use large fines to frighten (money-exchangers) away, prohibit them from entering the country, and expel them from the country to penalize them. But the relevant legislation has yet to be examined.”
The JP Morgan analysts said there’s no draft legislation of that kind now in place and no provision for criminalization in the newly amended Financial System Act, which will take effect in November.
“We’d like to think the impact from potential criminalization itself may not be big,” the team wrote, as quoted by Inside Asian Gaming. “First, we believe anyone who provides or uses illicit FX services is well-aware that such activities are not legal—so it all boils down to ‘how severe the actual crackdown is,’ almost regardless of whether it’s a crime or contravention.
“Second, we think these illicit FX exchanges on and around casino floors target a very specific and niche cohort of players (typically the low/mid-end players who urgently need extra cash to extend the play), hence the impact should be relatively limited—our best guess is less than 10 percent of total GGR is using these services.
“Third, as almost always is the case, there will obviously be the Balloon Effect; demand could move to other areas of loopholes (pawnshop using UnionPay cash-back scheme, underground banks, etc.) and mitigate the impact, unless the illicit/grey channels are completely eradicated.”
