According to Nelson Kot, the president of the Macau Comprehensive Social Research Association, Macau’s gaming operators have been discussing actively with licensed junkets, aiming to boost the VIP revenue rebound.
Kot told AGB that Macau casinos’ rebound rolls on, and the city’s gross gaming revenue continuously improves. In this way, gaming concessionaires have been proactive in contacting their junkets.
Junkets are now restricted under Macau law to only work with one concessionaire. Signing a contract with the concessionaire is also mandated by law, so former junkets are finding the circumstances limiting compared to how they used to do business.
“Many junkets are waiting to observe the markets before engaging with the clients,” notes Kot.
“They are waiting for casinos to give more benefits, as they can’t choose which casino to bring their clients to. They still endeavor for the best offering, such as free hotel rooms, free ferry tickets, and others,” he notes.
Kot points out that junkets think that non-gaming facilities the gaming operators they contract with will be very helpful for engaging with the clients.
VIP ramp-up
According to the latest data from the Gaming Inspection and Coordination Bureau (DICJ), revenue from VIP baccarat amounted to some MOP8.56 billion ($1.06 billion) in the first quarter of 2023, which accounts for about one-fourth (24.7 percent) of the city’s total revenue of MOP34.6 billion ($4.28 billion) for the first three months of the year.
The same gaming expert indicates that “none of the gaming operators want to drop VIP segments, despite the new gaming legislation implementing more restrictions on junkets.” The bet amount in the VIP area is much higher than the mass.
In an interview with AGB, Kot revealed that some of his junket friends saw results in the first five months of this year. Some junkets had the rolling chip volume exceed HKD100 million ($12.8 million).
“I believe the future VIP revenue will continue to ramp-up with more junkets back to work”, noted Kot.
Macau to have more junkets in the future
Kot believes that the number of junkets could increase in the future, stating that “some people who have good connections with high-spending gamblers could apply for a junket license with the DICJ.”
The number of licensed VIP gaming promoters in Macau has been slashed by almost 62 percent from 2020, falling below 40 for the first time since the junket licensing regime began some 20 years ago. Macau has just 36 licensed junkets in 2023, down from 46 a year ago and well below the peak of 235 back in 2013.
Kot considers that even as government welcomes high-spending gamblers to Macau, as long as the VIP gamblers are not involved in any funding issues, then life can go on normally. With the recovery of tourism in Macau, the gambling industry in the city is gradually coming out of the shadow of the junket crackdown, albeit with a totally different tone.
Kot analyses the current situation from a management point of view. Under the new junket law, they are no longer allowed to share gaming revenue and can only receive a commission of 1.25 percent of rolling chips from concessionaires. Junkets are not allowed to operate VIP rooms. So now they don’t need to undertake all the related costs.
While the shift in operational logistics could be a short-term boon for junkets, it remains to see how they can keep up in a market increasingly focused on driving them out.
MGM: first slice of the cake
Speaking to AGB, Billy Song, president of the Macau Responsible Gaming Association (MRGA), says that MGM was the first concessionaire to kickstart the VIP segment after completing the 10-year concession in January of this year. He also mentioned that Sands seems to have signed the most junkets in the city.
In addition, Song noted that the foreigner gaming zones are also the market’s focus, as the tax break is very attractive to the gaming promoters.
According to the government, six operators have established areas specially for gambling by foreigners, across an aggregate of 12 casino properties.
New VIP rooms in Galaxy Macau
Galaxy has also opened a new VIP room – Yinzuan Club, on June 18th.
According to reports, the venue encompasses eight private rooms. Gamblers who meet the requirement to enter have to exchange over HKD1 million ($130,000) in rolling chips to access the private space.
The Yinzuan Club has a minimum betting value of HKD3,000 ($384).
