Macau Confirms Junket Operators Have Dropped By Nearly 46 Percent

Summary

• Macau junket operators have dropped to just 46
• New gaming laws will hurt existing junket operators
• Macau gaming landscape to change significantly going forward

Macau’s gaming market at one point in time was able to generate 5x more revenues than Las Vegas’s gaming market. One big reason for Macau dominating the global gaming market was because of its thriving VIP gambling sector which was based on junket operators.

Junkets served as middle-men between Macau’s casinos and wealthy Chinese gamblers. Casino operators formed partnerships with junkets and gave them a commission based on the spending of their VIP clientele which were mostly Chinese gamblers from the Mainland.

Macau’s thriving VIP gambling market has shrunk significantly in the last 24 months. While COVID-19 did play a big role in declining revenues, it was Beijing’s new policy change that ultimately broke the back of the VIP gambling market. China made changes to its criminal laws in 2021 to discourage individuals from luring Chinese gamblers to overseas casinos as China wanted to stop the flow of capital leave its borders.

Junket operators do precisely this as they lure VIP gamblers not just to casinos in Macau but also to overseas casinos in places like Australia, South Korea, Vietnam, Cambodia and the Philippines.

China sent a very strong message to Macau’s junket operators in the fourth quarter of 2021 when they arrested Alvin Chau, the head of Suncity Group, the biggest junket operator in Macau. His arrest made it clear that China was going to target junket operators and enforce its criminal law.

When Chau was arrested on Dec 1, casino operators in Macau decided to cut ties with junket operators as they did not want to antagonize the Chinese government. Melco Resorts Entertainment Ltd, Wynn Macau Ltd and Galaxy Entertainment Group Ltd confirmed that they had closed down their junket VIP rooms and would not work with junket operators going forward.

This decision hurt the remaining junket operators in Macau. Back in 2013, there were a total of 235 licensed junket operators in Macau and in Jan 2022, there are only 46 licensed junket operators left. The decline in junket operators in the last 12 months is reported to be around 45.9 percent.

Gaming Landscape Will Change

Macau’s gaming landscape will change in the next 12 months as casino operators finally move away from VIP gambling and focus on premium and mass market play.