End of Macau Junkets Could Harm Local Government More Than Casinos

Posted on: December 8, 2021, 10:46h. 

Last updated on: December 8, 2021, 11:16h.

Macau junkets appear to be a thing of the past, at least in the manner in which they have operated for more than a decade. That could present more consequential fiscal damage to the region’s government than its casinos.

Macau junket groups Suncity Alvin Chau
A Suncity Group Sun Ace rewards card is pictured. Suncity has been one of the largest VIP junket groups in Macau, but the arrest of the promoter’s founder is leading to the gaming industry doing away with such third-party partnerships. (Image: Rappler)

The end of junkets, which is coinciding with the recent arrest of Suncity Group boss Alvin Chau, will presumably hurt VIP gaming revenue in Macau’s glitzy five-star casinos. But the region’s six casino operators say fewer high rollers brought to town by junkets won’t overtly damage their operating revenue. That’s because such income is shared with junkets, and those high-end customers typically are afforded numerous complimentary perks, such as free or discounted accommodations and dining.

Macau scholars say the end of junket operations will instead more severely hurt the local government.

Prior to COVID-19, gaming accounted for more than 80 percent of the SAR’s tax receipts. VIP gaming accounted for more than 46 percent of Macau’s $36.4 billion in 2019 gross gaming revenue (GGR). Casinos share 39 percent of their GGR with the Macau government.

Junket Trash Day

Junket groups have long been responsible for bringing the mainland’s wealthiest players to the Chinese Special Administrative Region (SAR) to gamble. Macau is the only place under China rule where gambling is permitted.

Being one of two SARs (Hong Kong the other), Macau is free to determine its own rules on gambling. But under the enclave’s “one country, two systems” policy agreement with China, Macau does much to stay in the good graces of the People’s Republic. Part of Macau’s recent efforts to satisfy that mission is cracking down on junket groups. China President Xi Jinping has expressed his desire to rid the country and Macau of such gaming promoters.

Those days are here. All six casinos are in the process of severing their ties with junket groups. Inside Asian Gaming reports that all junket operations will likely be concluded by the end of 2021.

Transparency Vital

Macau’s six casino licenses are set to expire next June. Macau’s 2001 gaming law allows the local government to extend the licenses one time by up to five years. Otherwise, fresh tenders must be issued for gaming to carry on.

Macau officials continue to review the region’s gaming industry, with the ultimate goal of bringing more clarity to the public and China in how casinos operate and are controlled. Casinos ridding their resorts of junkets is likely a proactive step in what was presumably going to be required under Macau’s new legal gaming regulatory environment.

To construct an internationally approved, modern casino tourism jurisdiction which will also gain the long-term support by the Chinese government, the phasing out of this segment seems inevitable,” University of Macau Professor Ricardo Siu Chi Sen told GGRAsia. Siu’s research is focused on the region’s gaming industry.

Siu added that junkets have operated under little transparency, including how they recruit mainlanders to gamble in China. Marketing gambling services is illegal in the People’s Republic.