Gaming | Scrutiny of junkets to be increased as VIP business thrives

Macau regulators are heightening their scrutiny of gaming promoters that bring in high-stakes players to casinos, amid an increase of VIP visitors to the regions.

The local government plans to tighten standards for junket operators beginning in January when they review applications for new and renewed licenses, according to Paulo Martins Chan, director of the Gaming Inspection and Coordination Bureau. The moves come as business in the world’s biggest gaming hub is booming, with VIP gamblers helping to drive a rebound that saw casino revenue climb to a three-year high in October.

“The government will review and strengthen the gaming rules,” Chief Executive Chui Sai On said in his annual policy address yesterday. “The government will also regulate junket operations, promote responsible gaming and boost the Macau casino industry’s competitiveness.”

Macau has an uneasy relationship with the junket businesses that bring in mostly Chinese high-stakes players. Though the high-roller business has been girding the casino industry’s rebound, the Macau government reiterated its call for operators to increase non-gaming revenue and to expand offerings to appeal to casual gamblers and tourists.

“When the market gets better, more people are eager to come back and do business, but Macau regulators will be more cautious during the junket approval process,” Chan said in a briefing in Macau yesterday.

He said the Macau gaming regulator has conducted several reviews this year on junket promoters to examine whether they have strictly adhered to government requirements and established a sound financial accounting system. Last year, the government announced plans to increase supervision of the junkets and raise capital requirements.

Stronger oversight may not be a bad thing, according to Bloomberg Intelligence analyst Margaret Huang, because it allows the larger junkets to target better quality players from China.

“Operators would also strive to better compete in this market by delivering higher quality, luxury facilities and amenities to cater to this business segment,” Huang said.

Macau is the only place in China that allows casinos, and tightened regulations also reflect Beijing’s drive to stanch capital outflows, some of which make their way to the territory. Across Macau this year, the government deployed ATM-machines with facial recognition software to verify identities and help monitor transactions for those using Chinese bank cards. As a result, the ATMs have seen a decrease in the number of withdrawals and transaction value, according to an Apple Daily report this week.

The ATM rules followed a ban last year that prohibits proxy betting by telephone aimed at curbing bets from gamblers in China.

Macau has also stepped up its screening of visitors. More than 250 people have been banned from entering casinos this year due to illegal activities such as theft and improper use of phones, Chan said.

The regulations could pose a risk to the 15-month growth streak in gaming receipts, while any slowdown in the Chinese economy could also present a challenge. Data on Tuesday showed China’s economic expansion dialed back a notch in October. Still, the world’s second-largest economy is on track for its first full-year acceleration in seven years.

Analysts see Macau benefiting from increased integration with the mainland. Completion of infrastructure projects including a cross-bay bridge linking Hong Kong, Zhuhai and Macau are expected to draw more visitors.

The Bloomberg Intelligence index of Macau casino stocks declined 0.5 percent yesterday, retreating for a third day after touching a more than two-year high last week. MGM China Holdings Ltd. dropped 1.7 percent in Hong Kong trading, while Wynn Macau Ltd. slipped 0.2 percent. MDT/Bloomberg