MACAU BUSINESS
from local law firm MdME wrote in a recent note about the law.
“Under this framework, the credit relationship is established only between the concessionaire, as lender, and the player, as borrower, with the gaming promoters acting as an attorney-in-fact or an agent of the casino operator,” the lawyers wrote. “In its role as credit agent, a gaming promoter may be paid a consideration, as commission or otherwise, which could be different, including in respect of the basis for its calculation, from the commission received under a gaming promotion agreement, which is levied not on the amount lent to a player but over its total net rolling.”
“The new law is perceived as another serious setback to gaming promoters. With this legislative option, said to be taken to pursue the objectives of healthy and sustainable development of the gaming sector, the granting of credit for gaming will be legally reserved to the casino concessionaires,” Messrs Bandeira and Proença added.
CONTINUOUS CRACKDOWN Indeed, Macau junkets have been under immense pressure in recent years due to heightened supervision from authorities, high-profile arrests of industry veterans like Alvin Chau Cheok Wa and Levo Chan Weng Lin, and the impact of the Covid-19 pandemic. The implementation of the new gaming law and new regulations for the operation of
32 JUNE 2024
junkets, which took effect last year, has significantly transformed their role—junkets now only play an assisting role to gaming concessionaires and are just entitled to a maximum commission of 1.25 percent of the rolling chip turnover for their services. This marks the collapse of the segment, as junkets used to operate their own VIP rooms in casinos and share gaming revenue with concessionaires in the past.
The latest figures from the Gaming Inspection and Coordination Bureau (DICJ) show the number of licensed junkets has decreased by half, dropping to 18 in early 2024 from 36 in 2023. This also represents a significant decline from 95 in 2020 before the pandemic and 235 in 2013 during the segment’s heyday. While there is no official data on the exact contribution of junkets to Macau’s gaming revenue, recent DICJ data reveals that Macau’s casino revenue reached MOP183.05 billion (US$22.88 billion) in 2023, with the VIP segment accounting for nearly 25 percent, or MOP45.2 billion, of the total. However, the revenue from the VIP segment now primarily comes from VIP rooms directly operated by gaming operators, with minimal contribution from junket operations.
In a recent research note, Macquarie Equity Research stated that the new credit law will have a limited impact on Macau’s gaming revenue. This is due to the insignificant contribution of junkets to overall gaming revenue, as well as the
increasing efforts of gaming concessionaires to directly handle VIP patrons nowadays.
GO ELSEWHERE AND UNDERGROUND
“These new rules have made the business environment more challenging for us,” says U Io Hung, the president of the Macau Professional Association of Gaming Promoters. He acknowledges the intentions behind these changes and adds, “[We] can only get prepared and adapt to these changes in the business environment.”
High rollers, particularly those from Mainland China, heavily rely on credit for gambling due to capital restrictions in place across the border. Since junkets can no longer extend credit to patrons directly in Macau, Mr. U remarks that these patrons might start frequenting casinos in other regions, like Southeast Asia. “Another potential problem is that this gaming credit business might go underground,” he adds. Another junket representative, who prefers to remain anonymous, also expresses concern that this new law will further undermine junkets’ role and relevance. “In the future, if our patrons require credit for gambling, we can only refer them to the concessionaires, who may or may not approve their request,” the representative says.
Even if the request is approved, the process might be time-consuming and inconvenient, and the approved amount may be lower than
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