Macau junket industry decline continues
The majority of operators have shifted their operations from mainland China to Hong Kong.
Macau.- Macau’s junket industry has declined notably, with a significant number of operators moving from the mainland Chinese market to Hong Kong. Luiz Lam, former director of the Macau Association of Gaming and Entertainment Promoters, told Asian Gaming Brief that out of 36 existing junkets, only 12 to 13 are currently operational, with half of them having shifted their focus to the Hong Kong market.
This can be attributed to the crackdown on junkets, which has made it increasingly challenging for operators to sustain their models. Despite the lifting of Covid-19 related restrictions, the revised criminal law in China targeting Macau’s junkets directly impact the viability of their business.
The Chinese government has implemented an amendment to its criminal law, creating a new offence against cross-border casinos that assist, organise or solicit Chinese citizens to gamble. This legislative change came into effect on March 1, 2021.
While the Chinese Immigration Service no longer imposes travel restrictions to Macau, certain businessmen with outstanding bank loans face the risk of police calls if they visit, Lam said. And while Macau law permits concessionaires to extend gaming credit to players, collecting these loans in mainland China is deemed illegal, leading some players to exploit the situation and take legal action against junkets in Chinese courts.
In contrast, Hong Kong presents a more favourable landscape for junkets. In the event of a gaming loan dispute, junkets can directly sue the players in civil courts. Additionally, Hong Kong boasts the Faster Payment System (FPS), enabling clients to transfer money to Macau more easily. The system allows instant transfers of up to HK$1bn (US$128m).
Macau also approved a new junket law last December by which operators are no longer permitted to share gaming revenue and are limited to a commission of only 1.25 per cent of the rolling chip from concessionaires.
Some high-spending gamblers are bypassing the involvement of junkets, and gaming operators are offering incentives such as food and hotel room coupons to players with substantial rolling chip volumes.
To compound the challenges faced by junkets, the Macau government has reintroduced a 5 per cent commission tax on all junket commissions.
While reports from Deutsche Bank indicate a significant increase in spending per mass visitor in Macau, Lam said that high-spending gamblers have yet to fully return to Macau.
