High rollers continue to avoid Macau
Echo Entertainment reported last week that turnover from VIP gamblers at its Australia casinos almost doubled to A$23 billion (US$17.96 billion) during the first half of 2014. Net profit for the period rose 78 percent to A$112.6 million (US$87.59 million), according to Reuters.
But junket runners skimmed off a lot of those profits, said Echo CEO Matt Bekier, however, blamed junket operators for eating into margins during the six months to Dec. 31, as VIP revenues grew to account for nearly a third of the group’s overall revenue from just 18 percent a year ago.
“Margins in this half are particularly under pressure because a lot of these junkets operated under profit-share agreements,” Bekier said. “We’re now looking at about 84 percent of VIP turnover being booked through junkets.”
Many jurisdictions outside Macau have seen a windfall of business due to the crackdown on corruption in the Chinese gaming hub. In the wake of that campaign, which began last July and has resulted in eight months of declining revenues in Macau, VIP players have opted to travel to South Korea, the Philippines and Australia.
Junket operators including Jimei International and the Suncity Group work with casinos to arrange credit lines, travel and accommodations for high rollers. In return, they get a portion of the profits.
On Tuesday, Jimei International said it had entered a junket arrangement with a casino operated by Echo’s rival Crown Resorts Ltd in Perth, in western Australia.
“This is likely to continue for the foreseeable future because of the current situation in Macau,” said Michael Ting, a Hong Kong-based analyst at CIMB.
