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Macau junket 4Q VIP demand still weak

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Macau Junket

The outlook for Macau’s VIP gambling segment remains clouded for the remainder of the fourth quarter, and market consolidation regarding some local smaller-scale junket operators is likely to continue. That is according to Kwok Chi Chung, president of the Macau Association of Gaming and Entertainment Promoters.

The association is a trade body for the middlemen that bring to Macau’s licensed casinos many of the city’s highest-rolling gambling customers.

Mr Kwok said he was “not optimistic” about the prospect for the city’s monthly VIP gross gaming revenue (GGR) in the final quarter of this year, and expected the trend of year-on-year decline to continue. Persisting United States-China trade-war tensions – affecting gamblers’ appetite for Macau trips – was cited as a key reason.

In the third quarter, Macau’s market-wide VIP gross gaming revenue (GGR) declined by 22.5 percent year-on-year to MOP31.09 billion (US$3.85 billion), according to official data. VIP baccarat revenue as a proportion of all casino GGR in the third quarter stood at 43.9 percent. In the preceding period, i.e. second quarter, it had been 47.2 percent.

“People are still pretty reserved in their [gaming] spending. And what the [junket] sector faces now is that the collection of [gaming] debt is difficult, and operators are also having fewer clients,” Mr Kwok remarked to us.

Regarding market consolidation, the trade representative told us some “small- and medium-sized junkets may close”. But he added the situation was “not as serious as what had happened during 2014 to 2015”. At that time a widely-reported anti-corruption drive in mainland China coincided with a significant fall in demand for Macau casino services, particularly at the higher end of the market.

That GGR slump was recorded in the city’s official data as taking effect from circa June 2014 and lasting for about two years. During that time, some local junket firms either scaled down their operations in the city or reduced the number of VIP rooms they operated in the Macau market. A few shut down their business.

Mr Kwok noted to us that since that extended downturn, junket firms had become more prudent in operations terms. A number had managed either to shift some operations “overseas”, or had “sought collaboration with the bigger junkets [in Macau] to co-run a gaming venue.”

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