Slash in junkets a ‘normal market adjustment’

The slash in the number of Macau’s junkets is in line with the city’s development on economic transformation.

Macau has again seen a reduction of licensed junkets this year after figures from the government show the number of gaming promoters has been slashed to 18.

The figure represents 50% of 2023’s numbers, according to information from the Gaming Inspection and Coordination Bureau (DICJ).

The latest reduction comes after the government enforced the largest gaming law overhaul in Macau’s history, as well as the junkets law, which states that junkets can no longer engage in revenue sharing arrangements with concessionaires.

Gaming scholar Davis Fong said the decrease in gaming junket licensees is a normal market adjustment.

He said it is expected the relevant numbers will not change much, adding the positioning of the gaming industry towards the mass market is in line with Macau’s positioning as a world tourism and leisure center and is suitable for the mid- to long-term development of Macau’s gaming.

Kwok Chi Chung, a board member of the General Association of Administrators and Promoters for the Macau Gaming Industry, echoed similar sentiments, noting the reduction of junkets is “reasonable and normal.”

He said the main reason for the decrease of gaming junket licenses is still the changes in customer sources, markets and business models, as cited in a TDM report.

Currently, independent travelers are the main source, and the gaming industry is moving towards a mass consumption model. He believes the market-dominated trend will not change.

The Secretary for Economy and Finance has previously ruled that gaming promoters’ commissions cannot exceed 1.25% of the (rolling) net amount of the conversion of gambling chips, whatever the calculation basis for converting those chips may be.

Kwok has advised gaming promoters to examine their balance sheets, as mass markets will be the driving force of the industry.

“The clientele is just not as great and diverse as before. They don’t even set foot in their market anymore. In the past when the profits were higher, junkets would take the initiative to search for customers. Now, with less profit on offer, they won’t make the initiative. This makes the market even smaller,” Kwok told the public broadcaster.

The government estimates gambling revenue this year will be MOP216 billion, which the two gaming experts believe will be achieved.

Fitch Ratings, however, said in a previous forecast that Macau’s gaming industry will reach some MOP231 billion in revenue.

The American credit rating agency expects local gaming revenue to recover in 2024 to 79% of the level seen back in 2019 (pre-pandemic).

At that time, casino revenues made, according to figures from the DICJ, an accumulated MOP292.455 billion.