Amid crackdowns in China and stricter oversight at home, the collapse of Macau’s gaming promoters, also known as junkets, is continuing.
On January 13, Macau’s Gaming Inspection and Coordination Bureau (DICJ) announced it would not renew the licenses of 35 promoters that had failed to comply with new guidelines issued in October, requiring them to compile and submit monthly accounting reports. That would reduce the total number of licensed junkets from 218 reported in 2014, down to 148. While IAG understands the 35 promoters represented the smaller end of the industry, the announcement is hardly good news.
A week earlier Iao Kun Group, which operates five VIP rooms in Macau, announced that its rolling chip turnover in the city had plummeted in 2015 by 61%, to US$6.42 billion.
Junket operators have long been a vital component of Macau’s gambling industry, recruiting high rollers to visit casinos in the city with offers of credit and hospitality in exchange for a share of the revenue generated. Over the past two years, however, their main customer base in China has been hit hard by president Xi Jinping’s anti-corruption campaign, together with a crackdown against their marketing operations there and the underground banking system they use to transfer funds.
In a January meeting with the Macau Junkets Operator Association, Macau’s Secretary for Economy and Finance Lionel Leong Vai Tac said there was a need to strengthen law enforcement and monitoring of junkets. He also suggested the drafting of new industry regulations, something analysts say will push still more operators out of business.
According to Sanford Bernstein, revenue from Macau’s VIP segment was less than half the city’s total gambling turnover in December, down from around 80% in the boom years. The Macau Association of Gaming and Entertainment Promoters says the total number of VIP gaming rooms in the city has fallen by 30 to 40 over the past six months, leaving around 100 still in operation.
