Junket Operators Are Needed For Macau Casinos

Posted: July 7, 2011 in Uncategorized

Commentary by:  Professional Panel, Professional Ground Decoder

7th July 2011

Good explanation on Junket needs but this is not the real reasons

On today’s Business Times the above forum was published. Though the article was written with some research but still, barking up the wrong tree with regard to Junkets operation in Macau.

The author described that junkets were needed for Macau because of,

(1)  they allow anonymity for players to casinos;

(2)  junkets has the network to do better background checks on players and hence, reduce credit risks.

The above given reasons look logical BUT, these are NOT the real reasons. The real reasons for Macau to continue rely on junket operators are really because of,

(a)  Over-built of casinos (gaming devices), that the casino operators could no longer keep enlarging and attaining enough revenue from the Mass gaming market. Though China has huge population base, however the averaged income level still very low compared to western (especially the US) countries and east Asia like Japan, Taiwan, Korea etc. The buses usually bring in more low-mass market tourists to Macau than the F.I.T. (free & Independent Travellers). Since 2007 the casinos were reverted back to the days when the business had to rely more on junket supplied players, with even greater level of churning of credit based casino betting with mitigated risk (by junkets).

(2)  In order that casinos could achieve higher and sustainable Win percentage (%) from the Baccarat tables, they need junkets to churn up volume of non-negotiable chips buying and betting. This, casinos cannot do it themselves. So, they need junkets.

(3)  Each years, it is estimated that about RMB 600b (Yuan $) been channeled through the “Underground Banking Channels” out of China mainland. Casinos in Macau are one of the effective means to process the hot-money. Junkets have very efficient underground banking channel network.

(4)  Macau’s high-costs casino property investment just could not be sustained on the mass market volume. Junket players form the majority of VIP gaming that produce the necessary sustaining factor for casinos. Put it simply, if without strong junket network for Macau, its casinos will be drastically reduced because they will be out of business soon. It is proven that the Mass market is just too small to sustain 39 casinos there. The control of visitation to Macau for Chinese nationality remains strict and Beijing could tighten the tap as and when necessary; so it is not a situation of free flow of visitors to Macau.  

—–

On the contrary, Las Vegas and Singapore casinos could sustain from Mass gaming market alone. Las Vegas primarily relying on non-gaming products & services rather than overwhelming on casino revenues. (64% non-gaming vs 36% casino revenues).

Singapore Integrated Resorts are currently relying on casino revenues (about 75%) in its initial stage of casino landscape. Its government hopes to reduce that portion to at least 50-50 split over time. However, due to there’s only two casinos in Singapore, both casinos (MBS & RWS) could still attain very high profit margins from the Mass market, coupled with very low gaming tax regime.

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Comments
  1. BRETT TURNER says:

    HI I WOULD LIKE TO BECOME A HOME JUNKET REP FOR YOUR CASINO , PLEASE REPLY ASAP AT = BRETT.TURNER96@YAHOO.COM

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