Macau’s gaming regulator has ordered junket operators in the city to cease offering credit to the VIP gamblers they serve.
In a December 6 note, brokerage firm Bernstein released a note saying, “Wynn and others are in the process of shuttering junket operations.”
The order came down from the Macau Gaming Inspection and Coordination Bureau (DICJ), which oversees the Chinese SAR’s multibillion-dollar gaming industry. It’s the latest blow to the once-powerful junket industry in Macau, which has shrunk from 235 operators in 2015 to just three dozen today.
Historically, junkets made their money by bringing high rollers from mainland China to the VIP rooms in Macau casinos. The junkets provided credit lines, accommodations, travel and other perks. But according to Reuters, over time authorities in Beijing came to believe that junkets diverted “billions of yuan overseas” and compromised China’s strict control of capital outflow.
Carlos Lobo, a Macau-based gaming consultant, told the news agency this could be the end of junkets as they once were known, and the businesses “will have to operate as a travel agency.” In that case, they could survive “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.”
Chan Chak Mo, of the Macau Legislative Assembly, told news media that the government’s proposal “deletes” current “provisions that allow gaming promoters to issue gaming credit in their name,” and agreed with Lobo that junkets can make commissions by “assisting in bringing clients” to the casinos in the SAR.
The end of traditional junkets accelerated with the convictions and imprisonments of junket kings Alvin Chau and Levo Chan last January. Chau, former head of the Suncity Group junket, was accused of crimes including organized crime and the facilitation of under-the-table multiplier bets. He was sentenced to 18 years in prison. Chan, former head of the Tak Chun Group, received a 14-year sentence for similar crimes.
The decline of junkets also means the decline of Macau’s VIP gaming segment. As reported by GGRAsia, baccarat—the preferred game of big-spending Chinese whales—accounted for only 24.1 percent of all gross gaming revenue in the third quarter of this year
Chan said debate on the new bill could continue through January, with a final reading at a plenary session of the assembly in February. After that, it could take up to four months for the law to take effect.
