China – Shrinking junket business is good for Macau’s stabilityBy Phil - 15 December 2021
Brokerage firm Sanford C. Bernstein has given its view on the demise of Macau’s casino junkets with the prediction that between 15 and 30 per cent of junket VIP customers will become premium mass segment players while others will become VIP players for the casino, meaning casinos will make more money from them by cutting out the fees charged by junket operators.
Bernstein analysts Vitaly Umansky and Kelsey Zhu said: “As junket business goes away, some players may well shift and we forecast that between 15 per cent to 30 per cent of junket VIP business could shift back to premium direct and premium mass. There will also be some negative impact on premium mass from the disappearance of junkets – we estimate between 10 per cent and 25 per cent of ultra-premium mass and five to 10 per cent of premium mass may disappear due to junket liquidity.”
“However, some of the junket business will in all likelihood migrate to premium direct while some segments may see some negative impact from the disappearance of junket liquidity,” they added. “Once post-COVID recovery materializes, we expect a less volatile gaming industry with better margin potential (albeit with lower revenue). For Macau, the future of the gaming industry is largely in the Mass and Premium Mass recovery. A shrinking junket business is good for the stability and future opportunity in Macau.”