Lui Che Woo, Chairman of Macau gaming operator Galaxy Entertainment Group (GEG), says that he respects the authorities’ decision to effectively shut down all junket room business in the city, as “the business is no longer recommended by local government”.
The statement was given to the media after the company’s shareholder meeting in Hong Kong on Monday. It goes in line with Macau authorities’ move to essentially do away with junket operations in the city by regulating them to a high degree, but goes a step further in indicating that the authorities won’t allow junkets to operate at all in the future.
According to Hong Kong media, Lui Che Woo says that GEG will follow the authorities’ suggestion, stressing that all the VIP business under Galaxy is legal. He stated that, according to the law, junkets operating VIP room business will likely no longer exist, as “the path is being cut off”.
Francis Lui, Deputy Chairman of GEG, added that Macau has three main laws to regulate the junket business, with two laws already in effect, and one law about to enter into force.
The Deputy Chairman pointed out that the VIP segment contributed only 10 percent to the company’s gross gaming revenue (GGR), while mass market play was over 80 percent.
It’s as yet unclear what conversations the government is having with the industry regarding direct VIP play, which doesn’t fall under the same legislation as junkets and is an avenue being pursued by the concessionaires as junket activity dries up. Direct VIP also goes (partially) in line with the government’s move to attract more foreign visitors to Macau – even offering a tax rebate to encourage operators to set up foreigner-only gaming areas which were previously likened to VIP rooms.
The revised Law No. 16/2001 – colloquially known as the ‘Gaming Law’, and Law No. 16/2022 – which regulates gaming activities, including satellite casinos and junkets, are both in effect, while the latest gaming credit bill was just approved in its first reading by legislators last week. The Macau government expects the law to come into effect next year.
The laws have limited junkets to operate with only one concessionaire and cut off their revenue stream to only a percentage of rolling chip, while mandating the payment of a 5 percent tax, which junkets have complained has made their business unprofitable and unattractive.
The new credit law means that junket operators are prohibited from providing lines of credit to punters, unless doing so via an agreement with the concessionaire, satellite casinos will be prohibited entirely from issuing lines of credit.
GEG announced its 1Q23 results on Monday, with the company recording adjusted EBITDA of $244.22 million.
The group’s GGR reached $776.14 million – up 79 percent yearly and 233 percent quarterly. Mass market revenue contributed the most, at $630.37 million. Electronic GGR totaled $43.09 million in 1Q23 while rolling chip GGR was $101.52 million.
According to figures published in April, mass market baccarat contributed $2.54 billion in 1Q23 – comprising 58.9 percent of market-wide GGR. Meanwhile, GGR from VIP baccarat totaled $1.06 billion in the quarter, representing 24.6 percent of Macau-wide GGR.