In this interview with CalvinAyre.com’s Stephanie Raquel, Tony Tong of MGIA explains the how different the Macau junket is during the pre-Chinese government crackdown to the present day market.
Junket operators are still reeling from declining VIP revenue in Macau, two years after the Chinese government ordered a crackdown on corruption. The pressure is now on every junket operators’ shoulders to find ways to increase their profits in the light of the political developments in mainland China.
The good thing about junket operators, according to Tony Tong of MGIA, is that they are evolving in order for their profits to grow. In a span of two years, Tong pointed out that most successful junket operators made bold decisions to test the waters outside the borders of Macau in search for revenues.
“They’re evolving, the junket operators. If they are sitting still in Macau, they will see declining revenue,” Tong told CalvinAyre.com “But there are many aggressive junkets. They have a lot of financial resources, they want to grow so they are going to Jeju island, Saipan, and Southeast Asia.”
Due to 25 consecutive months of declining revenues, Tong pointed out that a lot of junket operators moved their businesses to different countries like Philippines, Vietnam, Cambodia, Australia, New Zealand, and even Saipan and Europe.
Tong said that junket operators can take advantage of these other destinations since they offer lower tax rates and, in effect, means higher rebate, higher commissions for the agents, and higher rebate for the customers.
He cited the case of Imperial Pacific, a junket market firm that turned into an official licensed casino operator in Saipan. Tong said that the situation in Macau has prompted Imperial Pacific to diversify its business.
“In Saipan, Imperial Pacific acquired its own casino license, it started with some junket business in Macau but now they are now officially licensed casino operators in the US territory,” he said. “And, as we all know, many of this places offer both online and offline, so there’s an O to O combination. Here in the Philippines its very popular, the land based casinos putting cameras, they provide video streaming, they provide telephone betting, and video streaming from casinos, which is not allowed in Macau.”
Tong also pointed out that the behavior of Chinese mainland tourists is that they are now inclined to travel abroad, increasing steadily to about 120 million visitors. The bad news for Macau, according to Tong, is that it won’t be able to accommodate these tourists since the number of former Portuguese enclave’s visitor is restricted at around 30 million per year.
He doesn’t believe that the said number will move until the government finished its infrastructure development, which he projected to take two years.
“So within the next year or two, I don’t see a big increase in the number of visitors who is going to enter Macau, but overall the Chinese people are becoming wealthier, and their appetite for travelling abroad is increasing very rapidly, they are looking for sunshine, beautiful beaches. So places like Boracay, or Saipan, or Vietnam, or Danang, this kind of place will be a good place to heal,” Tong said.
