Macau VIP Gaming ‘Back to 2013-14 Levels,’ Says Junket Operator
Posted on: February 26, 2018, 04:00h.
Last updated on: February 26, 2018, 04:17h.
VIP gaming in Macau has bounced back to its levels of 2014, before a Chinese anti-corruption crackdown sent revenues in the gambling hub tumbling month-on-month for almost two years.
That’s the opinion of Tsang Ka Hung, CFO of the Tak Chun Group, who was speaking to GGRAsia at the opening of the group’s new VIP gaming club at the Plaza Macao on Sunday.
Macau’s recovery has been ongoing since the market bottomed out in the summer of 2016. It was expected growth would largely been driven by mass market gamblers, drawn by the non-gaming, family-friendly attractions of the new Cotai resorts.
But the resurgence of the VIP segment, which once accounted for 60 percent of Macau’s revenues, has been a welcome surprise for operators.
High Denomination Chips Are Rolling
Tsang said he expected big things for VIP gaming at the new club and across the 18 VIP operations in which Tak Chun has investment.
“Currently, the customer volume and bet amount have both increased,” he told GGRAsia. “With more customers and higher betting amount, it feels like the growth has returned to that in the 2013 and 2014 period before the fall of the market.
“Our conservative estimation is that there will be at least a 10- to 20-percent growth in rolling chip turnover. This matches the estimate of the market and that of the major investment analysts.”
Rolling chips are chips that are non-negotiable for cash, which are handed out to high rollers as a line of credit. Winnings are converted into real casino chips for cashing out, while “dropped” chips act as a tally of a high-roller’s debts, to be settled later, often back on the mainland.
Since junkets organize trips for wealthy Chinese VIPs, while offering them rolling chips to dodge restrictions on the movement of the money from the mainland, the industry was a major target of Chinese President Xi Jinping’s anti-corruption campaign.
Beijing put the regulatory squeeze on the junkets. So much so that, in September 2015, at the height of the economic slump, president and COO of Las Vegas Sands Corp Rob Goldstein said the junket business model was “broken.”
According to figures released recently by the Macau gambling regulator (DICJ), the junket market has shrunk year-on-year for five consecutive years, in terms of the number of operators. But while increased regulation drove many smaller junkets from the market during the slump years, the industry has now stabilized and the recent decline in operators has more to do with consolidation than stagnation.
Tsang said business is booming for his company, adding that he welcomes stricter regulation as a positive force for the industry.
“We support the government being more stringent over junket operations,” he said. “Only the better qualified junkets can stay and it will improve the market.”
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