Business & Investment

Macau casino hopes for daily gamblers after Reuters shuts down junkets

© Reuters. File Photo: On February 8, 2018, the company logo will be displayed in front of the fountain at Wynn Macau Resort in Macau, China. REUTERS / Bobby Yip / File Photo

Eduardo Baptista

Hong Kong (Reuters)-Macau casinos face a bleak short-term outlook after closing most of the profitable gaming rooms for wealthy gamblers. ..

The former Portuguese colony, the world’s largest gambling hub in terms of stakes, has long relied on income from VIP game rooms where High Roller made large bets.

However, the recent crackdown on the Chinese government’s junket business, which has arranged the transportation, accommodation and credit needed for gambling for wealthy customers, has questioned the financial outlook for casino operators, including: Wynn Macau (OTC :), Sands China (OTC :) and MGM China (OTC :).

According to Alidad Tash, managing director of 2NT8 Limited, a consultancy specializing in international casinos and integrated resorts, the junket-operated game room in the casino will be about the game revenue of Macau as a whole in 2019. It occupied one-third.

However, after Alvin Chau, head of Sun City, Macau’s largest junket operator, was arrested in November, its revenues were exhausted and game rooms throughout the city’s casinos were closed. Chau is responsible for setting up a Macau-based internet platform that allows bettors in mainland China, where gambling is illegal, to place bets abroad.

Replacing VIP revenue depends on the casino’s ability to attract mass market gamers. Bernstein analysts say it’s the “long-term growth story” of the sector, but it depends on managing COVID-19.

“The pace of recovery in late 2021 and 2022 depends on the occurrence of COVIDs and the relaxation of travel bans, and the key to recovery is to bring mass players back to Macau at a more normal level,” analysts said. Is stated in the memo.

“In the future, we are only recovering the masses and the premium masses.”

Masses are moms and pop players who play table games such as baccarat and blackjack, or slot machines. Premium Mass includes players who have bet enough money to earn free rooms, meals and transportation, but have not discounted losses or extended credits from the casino.

Representatives of Wynn Macau, Sands China and MGM China did not respond to requests for comment on plans to replace VIP revenue when contacted by Reuters.

Since the arrest of Chau, Wynn Macau shares have plummeted by about 23%, Sands China has fallen by about 13%, and MGM China has fallen by 20%.

I couldn’t ask Suncity for comment.

Limited entry

China’s strict COVID-19 movement restrictions limit the pools of mainland gamblers who can enter Macau. In the month prior to COVID in October 2019, Macau received 3.2 million visitors and plummeted to 328,245 in October 2021.

Most arrivals from mainland China are allowed to travel without quarantine, but visits remain depressed.

According to Benly, founder of Macau’s game consultancy IGamiX, ​​no group visas have been issued for players since the COVID-19 pandemic and individual visas to Macau were closely monitored.

There are also concerns about how Macau gamblers can bring money into the region.

Junket not only provides credit to High Roller, but also operates a shadow banking network to help circumvent China’s capital outflow rule, where players only take $ 50,000 worth of foreign countries a year. I did.

Premium Mass and Premium Direct players who made enough bets to win a loss rebate and received credit from the casino also used the method of transferring funds.

However, because the junket was closed, players lost the most convenient channel to bring money to Macau, Tash of 2NT8 said.

Macau casino hopes for daily gamblers after Reuters shuts down junkets Macau casino hopes for daily gamblers after Reuters shuts down junkets

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