Casino Partnerships With Junket Operators Are Public Knowledge, Macau Court Rules

Posted on: September 20, 2017, 03:00h. 

Last updated on: September 20, 2017, 04:13h.

Macau casino agreements with licensed VIP junket operators should be revealed upon qualified legal inquiry, an appeals court in China’s special gambling enclave has ruled.

Macau casino VIP junket company
A VIP junket company’s dealings with a Macau casino can now be disclosed publicly, and those not abiding by the law could end up like these folks, who were accused last year of operating a travel program for high rollers. (Image: Xinhua News Agency)

The decision comes as a result of an unnamed attorney who sued the city’s Gaming Inspection and Coordination Bureau (DICJ) after it refused to make public a list showing which casinos were engaged with VIP touring companies. The gaming agency argued it was a classified document. The Macau Court of Second Instance declared otherwise.

In its decision, the appeals court said the agency should be required to release the current partnership database when a person or persons can adequately demonstrate that they have a direct interest in reviewing the information.

VIP companies can only work with Macau’s six licensed gambling operators, Sands, MGM, Wynn, Galaxy, SJM, and Melco.

Dicey Dealing

While the court ruling is a blow to secrecy between Macau’s six licensed casino operators and the dozens of VIP junket businesses in the region, it doesn’t force the DICJ to give up specific information on the arrangements.

The judges said only the named casino and touring company relationship needs to be unveiled, not details as to how the pact operates. VIP travel entities have deals in place with casinos that allow them to bring wealthy mainlanders to the enclave and extend credit for them to play with. Casinos give kickbacks to the junkets in exchange for the high rollers.

China is continuing its anti-corruption campaign that extends to Macau’s junket industry. More uncertainty returned this week after analysts warned that lawmakers in Beijing had “escalated significantly” their directives to law enforcement agencies to continue the assault on junket ops.

VIP revenue has been slowly returning to Macau casino resorts, and revenues are growing, thanks in part to an increase in mass market tourism. The federal government, according to global investment research firm Bernstein, is noticing.

“The change of direction in our data feels noteworthy, especially in the context of increasingly bullish investor views, heightened earnings expectations, and valuation multiples which have expanded,” Bernstein said in a company note last.

Junkets Trashed

The number of licensed VIP groups continues to decline, as nervous owners fold up shop and take their high stakes businesses elsewhere in Asia, primarily the Philippines, Cambodia, and Vietnam. A report in January revealed that over the previous 12 months, the total number of licensed gambling promoters in Macau fell by almost 11 percent.

2017 began with just 126 junket entities and licensed individuals, down from 183 two years earlier.

Now that any legal or business challenger can obtain records of casinos colluding with junket companies, gambling companies and the touring companies will be on high alert. Both parties will want to make sure their financial records are clean and free of any potential illegal movement of money out from underneath China’s communist control.

A former Portuguese territory, Macau became part of Chinese control in 1999 under the condition that it would remain a free port and tax haven.