Smaller Macau VIP Junket Companies Targeting Upper Middle Class
Posted on: August 7, 2017, 06:00h.
Last updated on: August 7, 2017, 05:10h.
In Macau, a resurgence in mini-whale gambling has led to the formation of several mid-sized junkets that have been able to quickly establish partnerships with casinos for VIP operations. With less competition, smaller VIP junket are aimed squarely at the well-heeled, rather than the ultra-wealthy.
New VIP gaming companies have opened rooms inside the L’Arc resort and Legend Palace Hotel, two downtown properties. Junket investor David Group, once one of the biggest touring companies before drastically reducing its presence in 2015, recently debuted rooms inside Studio City and Galaxy.
Macau’s six licensed casino operators, SJM Holdings, Wynn Macau, Sands China, Galaxy Entertainment, MGM China, and Melco Resorts, facilitate the VIP rooms and provide a monthly commission to the junkets in exchange for their services.
“The business conditions for VIP gaming has improved a lot, hence some of the junket operators have resumed their businesses,” Association of Gaming & Entertainment Promoters President Kwok Chi Chung told GGRAsia. Chung, a former police chief in Macau, runs the trade group that supports VIP businesses.
July marked Macau’s 12th straight monthly gain. Accumulated gross gaming win is up 19 percent through the first seven months, with the city’s casinos generating over $18.5 billion in revenue.
New Game in Town
Smaller upscale junket groups are finding success by going after affluent white collar workers. While major travel companies like Suncity and Neptune typically market towards the upper echelon, with minimum packages starting at more than $25,000 and ranging upwards of $600,000, the smaller firms are looking to the middle and upper-class gambler.
Customers purchase expensive packages to be transported to the casino resort where they’re provided “free” money to gamble with in specially designated VIP rooms.
“Many junket operators now have changed for a better business strategy. Now they no longer only aim for the very rich clients, which in turn helps to reduce debt collection risk and stabilize their businesses,” Chung added.
Junkets typically work on a two-week debt collection schedule should players lose their shirt. Debt collection is where the junket business can become dangerous, as gambling debts are not enforceable in the Chinese legal system, due to the country’s ban on playing games of chance.
Suncity recently warned its employees to take added caution when dealing with customers in the mainland. If gambling doesn’t feed your hunger for risk, Suncity has numerous job opportunities posted on its website for its VIP operations.
With VIP revenue and mass market visitation both up in Macau, all eyes are on the mainland to see what step, if any, the federal government will take.
People’s Republic President Xi Jinping included Macau’s junket industry in his anti-corruption program in 2013. Stringent oversight cost the city gravely, as casino revenue went from $45 billion in 2013 to $28 billion last year. Publicly traded gambling stocks in Asia saw their valuations decrease by $146 billion.
In recent months, Jinping’s administration has seemed to ease its oversight and allow Macau to slowly reintegrate junkets, albeit in a reduced and overhauled manner.
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