There have been growing concerns that the Macau junket business is shrinking. New tax rules, tougher competition and more debt has already forced out some of the smaller players, while the others are scrambling to improve their earnings. Analysts with Morgan Stanley Asia Ltd. visited Macau last week and walked away confirming that junket operations in the city aren’t growing as fast for the companies there as they are in other locations.
According to the analysts, those junkets that have targeted mostly Chinese VIP players for the Macau casino market are finding that their overseas markets are growing at a faster rate than what they’re experiencing in Asia’s gambling capital. After meeting with concessionaires, junket operators and investors last week, analysts Praveen Choudhary and Jeremy An said, “We found the trip to be mildly positive with longer tail [demand] post-Chinese New Year holidays, upcoming spring dinners for junkets, and higher minimum bets.”
The analysts further stated, “For the junket operators we met, overseas business is growing faster than Macau, but not at the expense of Macau. Growth is mainly coming from the Philippines, Vietnam and Cambodia, while [South] Korea and Australia are not doing so well.”
There have been a number of Macau junket investors that have looked to other regional markets. Several are expected to have operations at NagaWorld in Cambodia this year, including Suncity Group and Guangdong Group. Tak Chun Group, a Macau gambling junket investor, announced earlier this month that it would open a VIP gaming club at NagaWorld sometime this month, as well.
Morgan Stanley’s Choudhary and An stated that Wynn Macau’s Wynn Place “continues to be the top place for VIP gaming” in the city and that Melco Resorts and Entertainment’s City of Dreams is “getting good reviews.”
CoD recently opened a new VIP gaming area on the second floor of the venue and the property’s president, David Sisk, said last week, “We’ve increased the size of the space and created a lot more private rooms for our various junket operations. We’ve got probably five of the junkets open in those spaces now. There’s some other junkets that will trail along as we get towards into the second quarter here.”
As the situation changes and junkets are finding it more difficult to remain afloat in Macau, they’re turning toward other markets. While junkets have always been a key component of the gambling industry in the city, it looks like a migration may be occurring that could lead to further reductions in the future.
