Macau Witnesses Another Drastic Decline in Junkets

Although Macau remains famous as the Vegas of the East, the region’s casino industry is now a far cry from its heyday of 2014 when 235 junket operators contributed around 60% of the $45 billion casino revenues, more than triple compared to Las Vegas. This drastic reduction is part of several targeted measures by local authorities to reign in the industry and diversify the region’s tourism sector.

Junkets Face Even Stricter Regulations

Macau’s gaming regulator set a cap of 50 junkets for 2024 last September. Only nine collaborators have registered so far, even though authorities allow up to 250 collaborators in the entire market. Gaming collaborators are individuals with extensive networks who use their influence to bring players to VIP rooms. They are subject to regulation and must adhere to strict guidelines.

Junket operators, each permitted to partner with a single gaming concessionaire, earn a commission, capped at 1.25% of rolling chip turnover, for their promotional services without sharing casino revenue. Licensing requires a guarantee of MOP 1.5 million ($186,500) and a minimum corporate capital of MOP 10 million ($1.24 million).

Macau’s VIP segment faces further restrictions as the government proposed barring junkets from lending money for gaming and enhancing controls over their activities. A new draft bill intends to limit credit provision to licensed companies, disallowing gaming intermediaries from this practice. The proposed legislation will significantly impact the junket sector, limiting its competitiveness.

The Industry Is Pivoting to High-Profile Resort Operators

Despite the significant reduction in junkets, Macau’s gambling industry has experienced an impressive resurgence as gaming revenue soared to MOP 183.05 billion ($22.76 billion) in 2023, marking a staggering 333.8 % increase compared to the previous year. These figures highlight the shift to high-profile casino resorts and the increasing reliance on customers from mainland China.

The 18-year prison sentence against Alvin Chau, the former CEO and founder of the junket operator Suncity Group, is another contributing factor to the declining popularity of such businesses, as they have faced significant scrutiny due to their associations with organized crime and money laundering. These shifting market paradigms allow local authorities better control over the gambling sector, contributing to a safer customer experience.

Evolving market dynamics and regulatory pressures mean that Macau’s Junket industry will likely continue its decline. While a few licensed operators will likely remain active, updated regulations and post-COVID realities mean the industry will never return to its previous state as the region steadily pivots to a new, more refined, and lustrous image.