In Macau there are massive casino complexes and high roller players. Between both of these there are what are known as junkets who give VIPs access to a variety of exclusive services. However, at the moment these junkets are feeling the full force of the drop in visitors to Macau.
Only 100 operators left
Over the past six years, the number of junket companies operating in Macau has drastically reduced. According to figures published by the DICJ (Macau Gaming and Inspection Coordination Bureau) out of the 235 junket companies in the market in 2013, only 100 are still in business today. One reason for this decline is obviously the anti-corruption policy launched in 2013 by the Chinese president Xi Jinping. Impacting greatly on the incredible growth in the Macau casino industry, this campaign against money laundering and tax fraud led to a drop of 38% in the Gross Income from Gaming in the city between 2013 and 2016. It also forced Macau casino operators to completely review their business plans by diversifying their clientele and range of services.
Having concentrated all their efforts on VIP players up to then, now casino owners are aiming at a much wider audience. This caused a significant rebound between 2016 and 2018. For the last accounting period the Macau casinos’ Gross Income reached 37.8 billion dollars. However, the contribution from high rollers to this figure is still high at almost 55% !
Macau’s junket industry
Well known to Chinese high rollers, the junkets intervene generally in the background of the industry. Suppliers of luxury products, they find rich players on the mainland to whom they offer travel and a range of luxury services. The journey to Macau usually takes place in private jets with all comforts supplied. Although a junket’s role goes much further than that of ordinary tour operators. After they confirm their client’s wealth and solvability, they work to get them almost limitless credit to play in the casinos belonging to the 6 companies operating legally in Macau. In return for this, the junkets receive commission from the casinos.
Drop in the numbers of visiting High Roller players
Even though high rollers are still the main source of revenue for Macau’s casinos, tourists and players of more modest means have greatly contributed to the upturn in the Macau gaming industry. The casino owners are not complaining about this. The margins on this category of players are much larger than those on high roller bets.
The Melco Crown group’s new business direction is a good example of the attraction of players of average means and tourists. Its Managing Director, Lawrence Ho has decided to “contain” high roller players in a new gaming area in order to welcome and better deal with the general public. A strategy that could pay out well.