Casino Junkets will continue to be increasingly important in the Asian gambling industry even as it expands into a more mass-market proposition. Hoffman Ma, deputy chairman of Success Universe Group, the owner of Ponte 16, recently spoke to CalvinAyre.com about the region’s entire industry and the fact that junkets are still of utmost relevance.
“In Asia junkets are very important in particular,” he said. “For all new destinations to be competitive this model must be built into the system. Take Singapore. They’re having difficulty now because the system hasn’t been fully built due to regulation and licensing issues.”
The VIP/junket system is so important in the Asian market as there are a huge amount of high rollers that need a passage into the casinos to spend their millions. Spending by VIPs still outperforms the mass-market segment in Macau and it should do for a while yet. There has been a slowdown though and you only have to look at a company like Asia Entertainment & Resources Ltd (AERL). They are currently trying to arrest a small decline and Ma believes the government has some responsibility in this area also.
“I think because of the fast growing industry even the government isn’t prepared,” he told CalvinAyre.com when asked if there needs to be improvement in the junket industry. “Even the regulators do not have enough manpower to cope with the changes.”
In terms of changes, the issue of online gambling’s involvement is never far from the discussion. It could eventually be somewhere the VIP operators look when trying to discover new innovations, Ma, though, thinks it will be some time before the junkets use online capabilities for anything other than a additional facility.
“Online operation is actually a facility for easy access to customers. It cannot do the background checks and the credit extension process for the casino,” he told CalvinAyre.com
Ma added that it’s far more important for junket operators to have a “knowledge of the customers” and it’s something that helps when thinking of how to “recruit” or “network” a group of “high net worth people” to their venue. The relationship between the junket and casino is something he thinks is “trustworthy” thanks to the “exposure” each gets if it’s a profit sharing model.
Overall, Ma explains that casinos in the region often depend on “location” and “attraction” over business model. As this continues to be the case, junkets offering commission and profit sharing will remain popular in Asia.