There will be blood as Macau junkets compete for VIP gamblers


macau-casino-junket-knife-fightMacau casino junket operators are being forced to up their game to win the business of VIP gamblers, whose scarcity is the chief driver of the market’s five-month long revenue decline. The VIPs are aware that their ranks have thinned as China continues to clamp down on corruption and tighten its grip on the flow of money from the mainland. The VIPs have gone from the hot girl at the bar to the only women left alive.

The David Group junket has gone to great lengths to attract customers for its seven VIP rooms in Macau, establishing its own travel agency (David Travel) and launching its own mobile app. As associate director Rita Lei put it, the junket business is “no longer just serving a cup of tea at the gaming table.”

Speaking at the Macau Gaming Show, Lei said junkets need to attend to customers’ “every need” while they’re in Macau. For customers looking for a break from Macau, Lei can book them an “adventure” in countries like the Philippines, Laos and Cambodia.

The Suncity Group will also soon be flying VIPs to Cambodia. Union Gaming Research issued a note on Tuesday saying it expected Suncity to start flying VIPs to NagaCorp’s NagaWorld casino in Phnom Penh as early as December. NagaCorp introduced a new junket incentive program last year and the company credits the scheme for boosting its VIP revenue by over 60% in the first half of 2014.

Union Gaming’s Grant Govertsen estimated Suncity would bring rolling chip volume of at least $150m per month based on the volume currently being generated by the Asian Nations junket, which operates outside Macau. Govertsen noted that $150m was probably only one percent of the monthly volume Suncity generates in Macau. As such, Govertsen said it was ‘realistic” to think Suncity could divert a “low single-digit share” of its Macau volume to NagaWorld.

Junket operator Iao Kun Group reported a 27% drop in VIP volume in October, worse than the 23.2% decline in the overall Macau market. Iao Kun, which operates five VIP rooms in Macau, remains in positive territory for the year, although just. Through the first nine months of 2014, Iao Kun is up 5% over the same period last year, better than the Macau market’s 2.3% gain through October. But with Macau not expected to rebound until the second half of 2015 at the earliest, Iao Kun’s chances of finishing in the black appear sketchy.

In July, before Macau’s decline commenced in earnest, Iao Kun was already warning that the launch over the coming years of all those new mega-resorts on Cotai would make for fierce competition over VIP gamblers. Now? We’re not saying the streets will run red with junket operators’ blood like in Macau’s bad old days, but there will be some more junket casualties.