Macau's Junket Concessions Limit Set to 50 in 2024, Casino Partners Included
Starting in 2024, the number of Macau junket groups that cater to high rollers from mainland China and other Asian markets will be capped.
Macau's Gaming Inspection and Coordination Bureau (DICJ) confirmed this on Monday, stating that they will only issue a maximum of 50 licenses for junket groups next year. Additionally, the total number of agents permitted to work in the junket industry will be limited to 250 employees with valid licenses.
Macau's junket industry has been under close observation by officials in Beijing for quite some time.
In 2013, when Macau's six casino operators brought in a record-breaking $45 billion, China's president Xi Jinping directed authorities in Beijing and Macau's Judicial Police to investigate the VIP travel organizers. This was due to concerns that the large amount of money flowing out of Macau through this tax haven posed a risk to the country's national security.
As junkets faced legal consequences for advertising gambling trips in mainland China (which is explicitly banned), their revenue dropped to less than $28 billion in 2016.
Recovery and Setbacks
Gambling revenue rose to around $36.5 billion in 2019 as junkets found new ways to advertise their services.
Before the pandemic, junket customers typically received free first-class travel between the mainland and Macau, as well as five-star accommodations. This was in exchange for committing to gamble a certain amount of money. Casinos and the junkets would then share the gaming profits.
During the pandemic, China targeted junkets again. Alvin Chau, often referred to as the face of the industry and reportedly worth more than $1 billion, headed the Suncity Group.
Chau was arrested in Macau in November 2021 and charged with various crimes, including fraud, illegal gambling, and forming a criminal association.
In January, Chau was found guilty and sentenced to 18 years in prison after prosecutors successfully argued that Suncity's private high-roller rooms included illegal, unlicensed side gambling, resulting in around $1 billion in lost tax revenue for Macau between 2013 and 2021.
Following Chau's arrest, many of his competitors chose to leave Macau and focus on more welcoming markets in Asia, such as the Philippines and Vietnam.
Shrinking Market for Junkets
In 2013, at the height of Macau's gaming industry, the gaming regulator reported 235 registered junkets in the region. Today, there are less than 40 available, meaning the DICJ's plan to cap the number of licenses at 50 for 2024 should not lead to intense bidding for the permits.
As per the region's updated gaming laws, each junket is now limited to working with only one of the six casino concessionaires. The casino companies, on the other hand, can only partner with a limited number of junket groups.
The DICJ ordered Sands China and SJM Resorts to pair up with no more than 12 junkets each, while MGM China and Melco Resorts can collaborate with a maximum of eight junkets. Galaxy Entertainment and Wynn Macau can work with up to five junkets each.
The new gaming laws introduced in 2022 before the renewal of the six casinos' 10-year operating licenses also establish a limit on the revenue share that a casino can allocate to a junket. This amount is now capped at 1.25% of the GGR generated by the junket client.
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Source: www.casino.org
