CASINO

More junkets to exit Macau VIP market

TAGs: junket operators, Macau

more-junkets-to-exit-macau-vip-marketThe number of licensed junket operators in Macau shrank 23% over the past 12 months and more are expected to exit Macau’s VIP market.

From 183 licensed gaming promoters in Macau as of January 2015, the tally dwindled to 141 by the end of the year, according to the Gaming Inspection and Coordination Bureau (DICJ). The figure includes 121 companies and 20 individuals.

Rob Goldstein, senior executive of casino operator Las Vegas Sands, believes more junket operators will exit the Macau VIP market but those that remain appear to be in good health.

“The ones that are still standing – and we met with some of the top people there last week – …actually they’re in pretty good shape and there is sufficient liquidity,” said Goldstein during Sands’ analyst call on Wednesday.

Earlier this month, new DICJ director Paulo Martins Chan said 35 gaming promoters had not renewed their licenses for failing to submit information required under new accounting rules for the sector.

Union Gaming analyst Grant Govertsen assumed that the 35 junkets that did not have their licenses renewed were probably already planning to exit the Macau gaming market due to weak demand.

“This is in line with our view that the junket industry will continue to see further closures and consolidation, and also in line with our current forecast for VIP gross gaming revenue to decline 12% in 2016,” Govertsen wrote in a note. “Most of these junkets that disappeared from the list this year, in all likelihood, were on life support in 2015 and therefore their loss will not be cause to take our VIP [revenue] expectations lower. Ultimately, the recent batch of 35 junkets not relicensed were already baked into the GGR cake and therefore there is no reason to contemplate changes to our forecast as a result of this new data.”

In October, DICJ announced stricter accounting rules for junket operators. The new guidelines requires gaming promoters to compile and submit monthly accounting reports to the gaming regulator. DICJ also confirmed that it has conducted six meetings with junket sector representatives for discussions on the new guidelines and a total of 330 participants attended the discussions.

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