Macau’s premium mass business could be affected by Alvin Chau arrest
Analysts at J.P. Morgan has noted that 10 to 20 per cent of Macau’s premium mass business is connected to junkets.
Macau.- Analysts continue to weigh up the possible effects of the arrest of Suncity CEO Alvin Chau Cheok Wa on cross-border gambling and money laundering accusations. JP Morgan has noted that the closure of Suncity’s VIP rooms will have an impact on Macau’s premium mass business.
It noted that 10 to 20 per cent of Macau’s premium mass business is connected to junkets and that it may be reasonable to assume that junket VIP revenue will drop to close to zero. But when it comes to the overlap between premium masses and VIPs, the situation is not so clear, because many high-rollers interact with multiple intermediaries and premium mass hosts.
According to Asian Gaming Brief, analysts said: “On the positive side, direct VIP and premium mass could see benefits from an expanded addressable market, as casinos can directly cater to previous junket players, particularly those that don’t need credit – by offering high-quality experiences.”
JP Morgan pointed out that the profit margin of direct VIPs in 2019 was between 15 per cent and 25 per cent, which is higher than the 10 per cent of intermediaries. The profit margin for high-quality mass, which is the market segment that most operators have been pursuing in recent years, was about 30 per cent to 35 per cent,
Analysts added that the loss of the VIP segment should not be a shock to Macau, because it may only account for 1 per cent to 4 per cent of operators’ EBITDA in 2023 and beyond, or 2 per cent of industry profits.
