Over the last few years, Macau has been cracking down on junket operators which ultimately resulted in a significant decrease in their number. Some 10 years ago, there were more than 200 junket operators, a number that has decreased to approximately 30 in 2023. Now, a new report reveals that the decreasing number of junket operators also do not have a strong impact on gaming revenue or profits.
Hubert Wang, MGM China’s president and chief operating officer, was recently interviewed by IAG and commented on the impact of junket operators in 2023. He explained that currently there are some 30 licensed junket operators.
Speaking about the market in Macau, Wang said that the VIP vertical brings approximately 15% of all gaming revenues and from that total, junkets likely contribute by only 5%. Additionally, he pointed out that the actual profits from junkets are far less.
When it comes to the ties between MGM China and Junkets, Wang pointed out that under the new regulations in Macau, the company can join forces with up to eight junkets. Still, he said that it is operating with much less and only a few actually help bring “meaningful business.”
More importantly, Wang revealed that MGM China doesn’t rely on junket operators. According to the company’s president and chief operating officer, in 2023, junkets contribute as little as 3% of the gaming revenues for MGM China’s properties. This shows that junkets have a negligible impact, especially considering the profits they bring which are marginal.
“I think right now in Macau you have 30-odd (licensed) junket operators. The DICJ has allowed MGM to have eight this year, but fewer are actually operating and only a couple are bringing meaningful business.“
Hubert Wang, president and chief operating officer at MGM China
Junkets Go Downhill
Macau’s crackdown on the junket operators started back in 2021 with the arrest of Suncity Group’s former CEO, Alvin Chau. Allegations against him claimed that he was involved in an operation that resulted in tax evasion for the sum of $1 billion. Earlier this year, Chau was sentenced to 18 years in prison.
Recently, legislators in Macau pushed forward a proposal that sought to implement tighter rules for junkets and enforce penalties against operators that do not comply with the regulations. This coincided with the gradual decrease in the number of the once-profitable junket operators.
It’s no surprise that gaming companies have shifted their focus from junkets to VIP gambling and the entertainment vertical, considering the allegations against junkets in recent years that tied them to illegal activities such as money laundering. After all, the actions of a junket operator may bring dire consequences for gambling companies.