MACAU BUSINESS
rollers only brought in 55.37 per cent of total gaming revenue in Macau last year, nosediving from over 70 per cent during the heyday of the segment. Commenting on the new VIP slot club, Grant
Govertsen, an analyst with boutique investment bank Union Gaming Securities LLC, said in a note that the new parlour showed that junkets here were “very much in need of revenue and willing to try an idea that in a different era would likely not have been considered.” But “it could be a tough sell to attract and retain” VIP players based merely on gaming machines as slot players were “exceptionally” fickle, he said.
with all 111 slots supplied by Australian gaming machine manufacturer Aristocrat Leisure Ltd. Zhang Zheng, a junket veteran who runs the Grand Prize club, bragged it was “The first slot parlour running the junket operation model in Macau, and even the world.” “We’re confident this VIP slot model can yield good
results as there’s still much room for growth in the slot segment together with the increasingly diversified portfolio of Macau’s visitors,” said Mr. Zhang in an interview, as slot revenues only accounted for about 5.1 per cent of total casino takings here last year. In the Grand Prize club, gamblers can bet from as low as HK$1 to as much as HK$8,888 on a single game. As he pointed out, their operation bears not much
difference to other VIP rooms here – they offer free accommodation and transportation for patrons, as well as extending credit with rebates, which can be settled afterwards. “The turnover here is expected to be several times the average [results] of the slot parlours in the mass segment, similar to the ratio for baccarat tables,” he added, declining to reveal more about the operation. The Macau Government does not provide a breakdown on gaming revenue between high-betting and mass segment slot machines but the revenue from baccarat tables in the VIP segment was only about two- thirds more than the mass segment in 2015.
Dire move After peaking in 2013 with MOP238.52 billion
(US$29.82 billion) in revenue, the VIP business last year was back to the size it was in the global financial crisis of 2009 due to the absence of the mainland’s big spenders against the backdrop of the relentless crackdown on corruption and a slowing mainland economy. To make matters worse, casinos have been less dependent upon the casino middleman. High
20 MAY 2016
The location of the venue – a third-party casino running under the gaming licence of SJM Holdings Ltd. – also didn’t help, as Jimei casino was one of the low-performing satellite casinos in Macau, Mr. Govertsen said. The opening of the new club could lead to “near-term disruption” in the high-limit slot segment – run by gaming operators directly – in other casinos in the area, he added. In addition to lacklustre market fundamentals, the alleged frauds and absconding incidents plaguing junket operators in the past year have also dampened business, intensifying consolidation within the segment. The number of licensed junkets – also known as gaming promoters in government parlance – stood at 141 by January of this year, shrinking by more than one-third from 217 two years earlier. Rob Goldstein, president and chief operating officer of Las Vegas Sands Corp., said in a recent conference call that he expected more junkets to close down this year although existing players “are in pretty good shape”. Gaming operator Sands China Ltd. is a Macau unit of Las Vegas Sands. Nonetheless, Mr. Zhang senses a silver lining in the clouds. “Many industry players are surprised we chose to open a new VIP room now but [I think] opportunities come with the difficulties,” he said, sitting on a chair that bears a resemblance to the throne of an ancient Chinese emperor. “We are the first [in starting this type of operation] – it’s not that we are afraid of competition; we don’t have any competition in this area.”
Ambitions Two visits to the site by Macau Business before and
after Chinese New Year in February found the traffic flow there was low. There were more junket representatives than gamblers – with some representatives sitting idly with their feet up in front of the gaming machines. Pressed about the performance of the VIP slot club
since its opening in mid-January, Mr. Zhang insisted it was good. “The market has responded very favourably,” he said. “Two or three local gaming concessionaires want to co-operate with us and are willing to let us open VIP slot parlours in their properties.”
He declined to disclose the identity of the
interested gaming operators, only noting: “The gaming operators with foreign capital are more
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