Operator News

China – China to crackdown on Macau’s junket operations

By Phil - 15 September 2021

The Macau casino sector is facing a series of shake-ups when the new concessions are approved with the government looking at axing the sub concession model and cracking down on how casinos handle junkets.

Analysts believe the crackdown will see the size of the junket market in Macau shrink with a ‘much smaller junket operation in Macau than in the past,’ according to analysts at Sanford C. Bernstein.

Analysts there said though: ““We do not view today’s events as negative for the Macau gaming industry. The process is largely progressing as we had anticipated.”

Analysts at Credit Suisse said: “During the daily operation, it is common that players will deposit certain money they win as deposit with the casino (direct VIP) and junkets. The regulation against such practice may not only shrink the working capital pool of the players, but also increase the transactional costs of the high end players as they would have to transfer money to Macau for gambling every time.”

“Junkets have lacked proper oversight and regulation (although regulation has improved over the past 5+ years), and a key area will be reigning in junket activities. Junket deposits have been a problem in the past (recall the Dore scandal, among others) and the government has been vocal about the need to reform this system.”

JP Morgan added that this ‘could make it complicated for concessionaires to continue in the junket business as the potential downside/penalty could outweigh expected economic benefits.’