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https://asia.nikkei.com/Business/Travel-Leisure/Macao-casino-operators-prepare-to-evict-junket-rooms
Macao casino operators prepare to evict junket rooms More than 10,000 VIP sector workers to be affected
PAK YIU, Nikkei staff writer
December 16, 2021 HONG KONG -- Most of the casino VIP rooms where Chinese high rollers would wager tens or even hundreds of thousands of dollars on a single hand of a baccarat are set to close by the end of the month, according to industry figures.
The closures follow on the heels of the arrest of Alvin Chau, chairman of Suncity Group, the city's top junket operator, and the shuttering of its VIP rooms within the gaming houses of all six of Macao's casino companies.
Wynn Resorts is set to close its junket rooms next Monday, with Melco Resorts & Entertainment following suit the next day. Las Vegas Sands and MGM Resorts have notified their junket partners to pack up by year-end.
All 85 of Macao's issued junket licenses are due to expire on Dec. 31. It is unclear whether the gaming regulator will renew any. Failure to do so would force the hand of the city's other two operators, SJM Holdings and Galaxy Entertainment Group.
"It is all quite sudden," a junket executive told Nikkei Asia. "It was all a unilateral decision telling us to cease. It is very unreasonable."
Until a few years ago, the junket agents accounted for a majority of Macao's gross gaming revenues.
Beijing, however, has signaled it will no longer tolerate this business model.
"What used to be OK, it is no longer OK," said Tony Tong, a longtime veteran of Macao's junket sector.
Junkets, labor groups and other industry observers estimate the closure of the junkets' VIP rooms will affect more than 10,000 workers in Macao. "If you include the junkets' [representatives] in mainland China, that will be over 100,000," Tong said.
According to Macao Gaming Inspection and Coordination Bureau statistics, the city's casinos host 1,566 VIP baccarat tables. Most of these are placed in dozens of junket rooms, but some are operated directly by the casino companies.
Secretary for Economy and Finance Lei Wai-nong acknowledged this week that junket room closures would impact the city's unemployment rate.
"As for the workers directly employed by the junkets, gaming promoters have to assure their labor rights are respected," he added.
A spokesperson for Tak Chun, the city's second-biggest junket agency, said last week that the group had received termination notices from two casino groups.
An internal memo, verified by Nikkei Asia, that was sent to staff of Suncity's Macao junket unit last weekend said the business would halt all operations as of Dec. 10.
"The company must be suspended in conjunction with judicial procedures, and the company won't be able to operate," said the unit, which had operated 17 VIP rooms in Macao before COVID.
The fate of Suncity's VIP rooms in South Korea and Southeast Asia remains unclear; on Thursday, calls to the rooms could not be completed or went unanswered.
Macao prosecutors charged Suncity's Chau on Nov. 29 with engaging in unlawful gambling operations, money laundering and leading a criminal group. He is alleged to have set up an illegal livestream gambling platform in the Philippines targeted at mainland Chinese.
His detention in Macao came a day after authorities in the eastern Chinese city of Wenzhou also issued a warrant for his arrest for "causing severe damage to the social order of the country" by collecting gambling debts and transferring funds out of the mainland through underground channels.
Macao prosecutors have charged Suncity Group's Alvin Chau, seen here in 2018, with engaging in unlawful gambling operations, money laundering and leading a criminal group.
Suncity Group Holdings, a Hong Kong-listed affiliate that operates casino resorts overseas, disclosed last Friday that Chau's control of the company had been jeopardized after a lender demanded full repayment of 313.61 million Hong Kong dollars ($40.19 million).
The loan had been secured by Chau's stake in the listed company. The lender claimed his arrest constituted a default under the borrowing agreement, although Chau had already resigned as chairman and director of the unit.
After years of close cooperation with junkets, Macao's casino companies are treading carefully now, observers say, because their government gaming concessions are due to expire in June and officials have yet to spell out terms and details for renewal.
"Casinos are definitely saying, 'I don't care if you are legal. I don't want to have a junket on my property, even if it is legitimate,'" said Alidad Tash, a gaming consultant who previously worked for Sands and Melco. "Just the name 'junket' is too dirty."
Macao's gaming regulator and its six casino companies did not respond to requests for comment. Nor have the companies, whose operations are all listed in Hong Kong or New York, made any statements to investors about the impending business shift.
Analysts expect a substantial number of VIP gamblers to stick with Macao's casinos by becoming direct customers. This should be more profitable for the casinos as they now have to split gains with the junket agents.
Bernstein Research analyst Vitaly Umansky estimated on Wednesday that VIP betting contributed less than 15% of earnings before interest, tax, deprecation and amortization for Macao casinos in 2019, even as it represented 39% of gross gaming revenues.
"Suncity's troubles have dealt a death blow to the junket industry in Macao that has been in place for nearly 20 years," he said in a report to clients. "[But] a shrinking junket business is good for the stability and future opportunity in Macao,"