Macau Business – New junkets: "different” or “obsolete”?

Special Report – New junkets: “different” or “obsolete”?

By João Paulo Meneses

Some say there will be no place for junkets in the “new Macau”, while others talk of mere “travel agents” Macau Business | July 2022 | Special Report | Gaming in Macau: The new era The main changes that could come from the laws currently under review: an end to dedicated junket rooms in Macau’s casinos and altered revenue-sharing arrangements between junkets and Macau’s casino concessionaires that would mean each Macau junket will only be allowed to work with a single Macau casino concessionaire.

The main consequence: the activity of gaming promoters (aka junkets) as we knew it until a few months ago will be very different should these two laws proposed by the Government be approved, since it’s likely few will dare to try and attract customers in China.

The main question: if the Government does not foresee their extinction, what exactly will their role be?

“It is highly unlikely the junkets will have a role to play,” Changbin Wang, Director, Centre for Gaming and Tourism Studies, Macao Polytechnic University believes. According Professor Wang, they will be like the independent agents in Las Vegas (see below).

“Clearly, junkets in Macau will continue to exist, under the name ‘gaming promoters’,” counters Jorge Oliveira Costa, interviewed in this special report.

Between these two extremes are other views gathered by Macau Business: “There will be a few junkets left, but they’ll be a shadow of their former ostentatious, law-breaking selves. They’ll effectively be glorified travel agents,” gaming expert Alidad Tash opines.

For Carlos Siu Lam, Programme Coordinator for the Bachelor of Business Management in Gaming and Recreation Management, “Pending final details related to regulations governing a junket and its operation, I expect junkets will be different. I think junket operators will still exist, perhaps like those operating in Atlantic City.”

Oliveira Costa clarifies: “Gaming promoters perform two important roles in Macau gaming: they bring rich patrons to gamble and to be entertained in Macau and they assume the bulk of the risk of granting credit for casino gambling. Apparently, they will be allowed to continue to grant credit for gambling. In third countries and in the Hong Kong SAR, I do not foresee a problem. The issue lies in how exactly will they operate in [Mainland] China. This is still uncertain.”

Uncertain, too, is the role to be played by the so-called “sub-agents” – the ones with the job of attracting potential clients and introducing them to the junkets.

For all these reasons, it is not surprising that the director of the Macau Junket Promoters Association, Lam Kai Kong, believes the new gambling laws represent a step backwards, one that returns the sector to the dark days of chipping.

According to Lam, the sector loses all flexibility in operational terms with the obligation for junkets to carry out their activity in a concessionaire and with the end of separate accounting from operators.

Likewise, analysts at J.P. Morgan have read the proposed laws and believe they would make junket activity effectively obsolete.

US models In Las Vegas, the business model that most closely resembles Macau’s junkets is the independent agent. These are non-casino people permitted to deal with casinos regarding the introduction of high-value players.

Regulations in Atlantic City are stricter than those in Las Vegas. The junket operators on the east coast work like tour guides, offering advice and arranging such activities as meals in restaurants, massages, spa treatments or shows during their clients’ stays.