The Macau government collected MOP394.2 million (US$48.7 million) in taxes in 2018 on the commissions the territory’s casinos pay to their junket partners, exceeding its forecast by 40 percent.
The haul, based on a tax rate of 5 percent, was equivalent to US$48.8 million and was 17 percent higher than 2017’s.
It came in a year in which gaming revenue rose 14 percent to MOP302.85 billion ($36.34 billion), around 55 percent of it generated from VIP baccarat, which was up 10 percent year on year and is the segment the junkets largely control.
Though VIP is steadily decreasing as a percentage of Macau’s overall casino revenues, junkets are still a crucial part of the mix for their role in recruiting and bankrolling high rollers, principally from mainland China, where casino marketing is prohibited by law, and arranging for their travel, accommodations and perks.
They also operate the private salons where the games are conducted, manage the cage and credit functions in the rooms, and collect on their clients’ losses, another critical role because in China gambling debts are legally unenforceable.
In return, they receive either a share of the win in their rooms or a commission calculated at up to a legally mandated 1.25 percent of the turnover, or “roll,” as it’s called, of the special non-negotiable chips their players use to bet.
It’s an expensive niche to occupy, and since the end of the casino boom years of 2004-2014, only those with the deepest financing have been able to survive, and scores of smaller promoters have either been driven out of business or swallowed up by larger ones. In 2014-15, when a nationwide Communist Party crackdown on corruption and lavish spending sent VIP play plummeting, dozens more sank. There are still a reported 100 or so licensed junkets operating today, but that’s down by almost half from just a few years ago.
This year, a decidedly down one for VIP play, largely in response to macroeconomic concerns and tightening credit markets in China, the Macau government is forecasting MOP360 million in commission tax, around 8 percent less than last year.
