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Wednesday 3 March 2021
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  • NEWS
    Korea’s Paradise Co continues upward momentum in February

    Paradise Co continues to slide with February casino sales down 36.5% sequentially

    Imperial Pacific to “vigorously defend” exclusive gaming rights on Saipan

    Imperial Pacific likely to have casino license suspended following admission of multiple violations

    Las Vegas Sands unlikely to return to Japan despite potential Tokyo lure

    Japanese Minister says interest of foreign companies shows Japan’s IRs will be profitable

    4Q20 key metrics for Macau gaming companies

    4Q20 key metrics for Macau gaming companies

    Hong Kong Jockey Club funds development of HK$500 million tower at City University of Hong Kong

    Hong Kong Jockey Club funds development of HK$500 million tower at City University of Hong Kong

    Genting Singapore set to raise US$3.2 billion from Yen-dominated bonds for Japan expansion

    Genting Singapore grants US$5 million award shares to staff and directors

    Trending Tags

    • FEATURES
      Uneasy alliance

      Uneasy alliance

      Turning RG Japanese

      Turning RG Japanese

      2021: Japan IR – Crunch time part 2

      2021: Japan IR – Crunch time part 2

      Diving into digital

      Diving into digital

      10 years ago: Many happy returns

      10 years ago: Many happy returns

      RG and the  player journey

      RG and the player journey

      Trending Tags

      • PEOPLE
        Home is where the heart is

        Home is where the heart is

        Dave Smith: Smell of success

        Dave Smith: Smell of success

        Scientific Games insists liquidity position strong after adding US$480 million in debt, cutting costs

        Scientific Games appoints Eileen Moore Johnson as Executive Vice President and Chief Human Resources Officer

        Creation theory

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        Paltronics announces passing of Stephen Cowan, much-admired Managing Director

        Paltronics announces passing of Stephen Cowan, much-admired Managing Director

        Dark days

        POST-COVID2: The most transformative business shock of our lifetimes

        Trending Tags

        • COLUMNISTS
          Gateway to Japan

          OPINION: Japan seeking its pound of flesh

          Memories of the man that was Sheldon Adelson

          Memories of the man that was Sheldon Adelson

          Big money

          A decade of differentiation

          A decade of differentiation

          How to set up for IR success

          How to set up for IR success

          Macau: Taking a sensible approach to responsible gaming

          Macau: Taking a sensible approach to responsible gaming

          Trending Tags

          • TECH TALK
            Scientific Games granted approval for release of third Duo Fu Duo Cai game into Asia

            Scientific Games granted approval for release of third Duo Fu Duo Cai game into Asia

            Aristocrat launches new MarsX Portrait cabinet

            Aristocrat launches new MarsX Portrait cabinet

            Cat call

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            Asia Pioneer Entertainment keeping up the pace in challenging times

            Asia Pioneer Entertainment keeping up the pace in challenging times

            Two more TVBET card games granted GLI certification

            Two more TVBET card games granted GLI certification

            Scientific Games granted approval for latest Jin Ji Bao Xi game “Singing Cats”

            Scientific Games granted approval for latest Jin Ji Bao Xi game “Singing Cats”

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            • iGAMING
              TVBET expands through Alavara Digital partnership

              TVBET expands through Alavara Digital partnership

              Live-games integration as an effective marketing tool for increasing bets

              TVBET to enter the Montenegro iGaming market

              Manila restrictions ease as Duterte implements General Community Quarantine for National Capital Region

              Philippine police arrest eight alleged members of POGO-linked “kidnap for ransom” gang

              PAGCOR reveals substantial POGO revenue rise in 2018 as enforcement role defended

              Philippines court order preventing new 5% franchise tax could halt POGO exodus

              MGM Resorts looking to raise US$750 million via senior notes offering

              MGM Resorts considering US$13 billion takeover offer for Ladbrokes owner Entain

              Evolution launches world’s first online live Craps game

              Evolution launches world’s first online live Craps game

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              • EVENTS
                Macau Wine & Dine returns this week with unique tasting event at Artyzen Grand Lapa Macau

                Macau Wine & Dine returns this week with unique tasting event at Artyzen Grand Lapa Macau

                Inside Asian Gaming names Portucau as venue for Macau After Dark 8 on 5 March 2021

                Inside Asian Gaming names Portucau as venue for Macau After Dark 8 on 5 March 2021

                Winter wonderland

                Clarion Gaming cancels this year’s ICE London

                AIGF leaders join SBC Digital India’s high-level speaker line-up

                AIGF leaders join SBC Digital India’s high-level speaker line-up

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                Alex Pratt, Stuart Hunter take the reins as ICE organizer Clarion Gaming announces management changes

                Founders of leading Indian gaming companies among speakers at upcoming SBC Digital India

                Founders of leading Indian gaming companies among speakers at upcoming SBC Digital India

                Trending Tags

                • MACAU
                  4Q20 key metrics for Macau gaming companies

                  4Q20 key metrics for Macau gaming companies

                  Closing all borders not an option despite government order to shutter 41 Macau casinos for 15 days

                  Macau casinos to no longer require negative COVID-19 test result for entry

                  IAG welcomes sponsors and supporters ahead of Macau After Dark 8

                  IAG welcomes sponsors and supporters ahead of Macau After Dark 8

                  Occupancy rate of Macau hotels falls to 40.3% in January

                  Occupancy rate of Macau hotels falls to 40.3% in January

                  COVID-19 vaccine could be available by October after “world first” facility in Beijing granted production approval

                  Macau health authorities to focus on casino workers in second stage of vaccination rollout

                  Scientific Games granted approval for release of third Duo Fu Duo Cai game into Asia

                  Scientific Games granted approval for release of third Duo Fu Duo Cai game into Asia

                  Trending Tags

                  • JAPAN
                    Las Vegas Sands unlikely to return to Japan despite potential Tokyo lure

                    Japanese Minister says interest of foreign companies shows Japan’s IRs will be profitable

                    IAG Vice Chairman and CEO Andrew W Scott among speakers as Nagasaki hosts first symposium on international tourism HR development

                    IAG Vice Chairman and CEO Andrew W Scott among speakers as Nagasaki hosts first symposium on international tourism HR development

                    Gateway to Japan

                    Pixel Companyz reports US$8.8 million loss in FY20 but confident in revenue potential of Nagasaki IR

                    Pixel Companyz recruits Japanese Olympic gymnast Kohei Uchimura as ambassador for Nagasaki IR bid

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                    Akimoto arrested for fourth time in Japan IR bribery case

                    Trial of Japanese politician Tsukasa Akimoto on bribery charges set for 29 March

                    Lawrence Ho says Melco’s China ties will drive Japanese IR growth

                    Lawrence Ho says Melco still committed to Japan but looking for the “right opportunity”

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                      Korea’s Paradise Co continues upward momentum in February

                      Paradise Co continues to slide with February casino sales down 36.5% sequentially

                      Imperial Pacific to “vigorously defend” exclusive gaming rights on Saipan

                      Imperial Pacific likely to have casino license suspended following admission of multiple violations

                      Las Vegas Sands unlikely to return to Japan despite potential Tokyo lure

                      Japanese Minister says interest of foreign companies shows Japan’s IRs will be profitable

                      4Q20 key metrics for Macau gaming companies

                      4Q20 key metrics for Macau gaming companies

                      Hong Kong Jockey Club funds development of HK$500 million tower at City University of Hong Kong

                      Hong Kong Jockey Club funds development of HK$500 million tower at City University of Hong Kong

                      Genting Singapore set to raise US$3.2 billion from Yen-dominated bonds for Japan expansion

                      Genting Singapore grants US$5 million award shares to staff and directors

                      Trending Tags

                      • POWER 50
                        2020 Asian Gaming Power 50: Top of the World

                        Singapore Court of Appeals denies Bloomberry’s latest appeal in long-running battle with GGAM over terminated Solaire agreement

                        Power restored

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                        2020 Asian Gaming Power 50: Top of the World

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                        2020 Asian Gaming Power 50: Number 1 – Francis Lui

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                        • NEWS
                          Korea’s Paradise Co continues upward momentum in February

                          Paradise Co continues to slide with February casino sales down 36.5% sequentially

                          Imperial Pacific to “vigorously defend” exclusive gaming rights on Saipan

                          Imperial Pacific likely to have casino license suspended following admission of multiple violations

                          Las Vegas Sands unlikely to return to Japan despite potential Tokyo lure

                          Japanese Minister says interest of foreign companies shows Japan’s IRs will be profitable

                          4Q20 key metrics for Macau gaming companies

                          4Q20 key metrics for Macau gaming companies

                          Hong Kong Jockey Club funds development of HK$500 million tower at City University of Hong Kong

                          Hong Kong Jockey Club funds development of HK$500 million tower at City University of Hong Kong

                          Genting Singapore set to raise US$3.2 billion from Yen-dominated bonds for Japan expansion

                          Genting Singapore grants US$5 million award shares to staff and directors

                          Trending Tags

                          • FEATURES
                            Uneasy alliance

                            Uneasy alliance

                            Turning RG Japanese

                            Turning RG Japanese

                            2021: Japan IR – Crunch time part 2

                            2021: Japan IR – Crunch time part 2

                            Diving into digital

                            Diving into digital

                            10 years ago: Many happy returns

                            10 years ago: Many happy returns

                            RG and the  player journey

                            RG and the player journey

                            Trending Tags

                            • PEOPLE
                              Home is where the heart is

                              Home is where the heart is

                              Dave Smith: Smell of success

                              Dave Smith: Smell of success

                              Scientific Games insists liquidity position strong after adding US$480 million in debt, cutting costs

                              Scientific Games appoints Eileen Moore Johnson as Executive Vice President and Chief Human Resources Officer

                              Creation theory

                              Creation theory

                              Paltronics announces passing of Stephen Cowan, much-admired Managing Director

                              Paltronics announces passing of Stephen Cowan, much-admired Managing Director

                              Dark days

                              POST-COVID2: The most transformative business shock of our lifetimes

                              Trending Tags

                              • COLUMNISTS
                                Gateway to Japan

                                OPINION: Japan seeking its pound of flesh

                                Memories of the man that was Sheldon Adelson

                                Memories of the man that was Sheldon Adelson

                                Big money

                                A decade of differentiation

                                A decade of differentiation

                                How to set up for IR success

                                How to set up for IR success

                                Macau: Taking a sensible approach to responsible gaming

                                Macau: Taking a sensible approach to responsible gaming

                                Trending Tags

                                • TECH TALK
                                  Scientific Games granted approval for release of third Duo Fu Duo Cai game into Asia

                                  Scientific Games granted approval for release of third Duo Fu Duo Cai game into Asia

                                  Aristocrat launches new MarsX Portrait cabinet

                                  Aristocrat launches new MarsX Portrait cabinet

                                  Cat call

                                  Cat call

                                  Asia Pioneer Entertainment keeping up the pace in challenging times

                                  Asia Pioneer Entertainment keeping up the pace in challenging times

                                  Two more TVBET card games granted GLI certification

                                  Two more TVBET card games granted GLI certification

                                  Scientific Games granted approval for latest Jin Ji Bao Xi game “Singing Cats”

                                  Scientific Games granted approval for latest Jin Ji Bao Xi game “Singing Cats”

                                  Trending Tags

                                  • iGAMING
                                    TVBET expands through Alavara Digital partnership

                                    TVBET expands through Alavara Digital partnership

                                    Live-games integration as an effective marketing tool for increasing bets

                                    TVBET to enter the Montenegro iGaming market

                                    Manila restrictions ease as Duterte implements General Community Quarantine for National Capital Region

                                    Philippine police arrest eight alleged members of POGO-linked “kidnap for ransom” gang

                                    PAGCOR reveals substantial POGO revenue rise in 2018 as enforcement role defended

                                    Philippines court order preventing new 5% franchise tax could halt POGO exodus

                                    MGM Resorts looking to raise US$750 million via senior notes offering

                                    MGM Resorts considering US$13 billion takeover offer for Ladbrokes owner Entain

                                    Evolution launches world’s first online live Craps game

                                    Evolution launches world’s first online live Craps game

                                    Trending Tags

                                    • EVENTS
                                      Macau Wine & Dine returns this week with unique tasting event at Artyzen Grand Lapa Macau

                                      Macau Wine & Dine returns this week with unique tasting event at Artyzen Grand Lapa Macau

                                      Inside Asian Gaming names Portucau as venue for Macau After Dark 8 on 5 March 2021

                                      Inside Asian Gaming names Portucau as venue for Macau After Dark 8 on 5 March 2021

                                      Winter wonderland

                                      Clarion Gaming cancels this year’s ICE London

                                      AIGF leaders join SBC Digital India’s high-level speaker line-up

                                      AIGF leaders join SBC Digital India’s high-level speaker line-up

                                      Winter wonderland

                                      Alex Pratt, Stuart Hunter take the reins as ICE organizer Clarion Gaming announces management changes

                                      Founders of leading Indian gaming companies among speakers at upcoming SBC Digital India

                                      Founders of leading Indian gaming companies among speakers at upcoming SBC Digital India

                                      Trending Tags

                                      • MACAU
                                        4Q20 key metrics for Macau gaming companies

                                        4Q20 key metrics for Macau gaming companies

                                        Closing all borders not an option despite government order to shutter 41 Macau casinos for 15 days

                                        Macau casinos to no longer require negative COVID-19 test result for entry

                                        IAG welcomes sponsors and supporters ahead of Macau After Dark 8

                                        IAG welcomes sponsors and supporters ahead of Macau After Dark 8

                                        Occupancy rate of Macau hotels falls to 40.3% in January

                                        Occupancy rate of Macau hotels falls to 40.3% in January

                                        COVID-19 vaccine could be available by October after “world first” facility in Beijing granted production approval

                                        Macau health authorities to focus on casino workers in second stage of vaccination rollout

                                        Scientific Games granted approval for release of third Duo Fu Duo Cai game into Asia

                                        Scientific Games granted approval for release of third Duo Fu Duo Cai game into Asia

                                        Trending Tags

                                        • JAPAN
                                          Las Vegas Sands unlikely to return to Japan despite potential Tokyo lure

                                          Japanese Minister says interest of foreign companies shows Japan’s IRs will be profitable

                                          IAG Vice Chairman and CEO Andrew W Scott among speakers as Nagasaki hosts first symposium on international tourism HR development

                                          IAG Vice Chairman and CEO Andrew W Scott among speakers as Nagasaki hosts first symposium on international tourism HR development

                                          Gateway to Japan

                                          Pixel Companyz reports US$8.8 million loss in FY20 but confident in revenue potential of Nagasaki IR

                                          Pixel Companyz recruits Japanese Olympic gymnast Kohei Uchimura as ambassador for Nagasaki IR bid

                                          Pixel Companyz recruits Japanese Olympic gymnast Kohei Uchimura as ambassador for Nagasaki IR bid

                                          Akimoto arrested for fourth time in Japan IR bribery case

                                          Trial of Japanese politician Tsukasa Akimoto on bribery charges set for 29 March

                                          Lawrence Ho says Melco’s China ties will drive Japanese IR growth

                                          Lawrence Ho says Melco still committed to Japan but looking for the “right opportunity”

                                          Trending Tags

                                          • REGIONAL
                                            • All
                                            • Africa
                                            • Australia
                                            • Cambodia
                                            • China
                                            • CNMI
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                                            • India
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                                            • North Korea
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                                            • Russia
                                            • Singapore
                                            • South Korea
                                            • Sri Lanka
                                            • Thailand
                                            • Vietnam
                                            Korea’s Paradise Co continues upward momentum in February

                                            Paradise Co continues to slide with February casino sales down 36.5% sequentially

                                            Imperial Pacific to “vigorously defend” exclusive gaming rights on Saipan

                                            Imperial Pacific likely to have casino license suspended following admission of multiple violations

                                            Las Vegas Sands unlikely to return to Japan despite potential Tokyo lure

                                            Japanese Minister says interest of foreign companies shows Japan’s IRs will be profitable

                                            4Q20 key metrics for Macau gaming companies

                                            4Q20 key metrics for Macau gaming companies

                                            Hong Kong Jockey Club funds development of HK$500 million tower at City University of Hong Kong

                                            Hong Kong Jockey Club funds development of HK$500 million tower at City University of Hong Kong

                                            Genting Singapore set to raise US$3.2 billion from Yen-dominated bonds for Japan expansion

                                            Genting Singapore grants US$5 million award shares to staff and directors

                                            Trending Tags

                                            • POWER 50
                                              2020 Asian Gaming Power 50: Top of the World

                                              Singapore Court of Appeals denies Bloomberry’s latest appeal in long-running battle with GGAM over terminated Solaire agreement

                                              Power restored

                                              Power restored

                                              2020 Asian Gaming Power 50: Top of the World

                                              2020 Asian Gaming Power 50: Top of the World

                                              2020 Asian Gaming Power 50: Meet the panel

                                              2020 Asian Gaming Power 50: Meet the panel

                                              2020 Asian Gaming Power 50: Ones to watch

                                              2020 Asian Gaming Power 50 list

                                              2020 Asian Gaming Power 50: Number 4 – Lawrence Ho

                                              2020 Asian Gaming Power 50: Number 1 – Francis Lui

                                              Trending Tags

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                                              Junkets unmasked

                                              The evolution of Macau’s cash cow

                                              Ben Blaschke by Ben Blaschke
                                              Wednesday 2 September 2020 at 19:08
                                              Junkets unmasked
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                                              In the first of a two-part series explaining the A to Z of junkets, Inside Asian Gaming examines the history of Macau’s junket industry, how they came to be partners with the SAR’s six gaming concessionaires and the introduction of specific regulations governing their operations over the past 20 years.

                                              In 2013, Macau’s VIP gaming sector recorded gross gaming revenue of MOP$238.54 billion (US$29.86 billion) – the ninth straight year of record revenues since such data was first recorded by the Gaming Inspection and Coordination Bureau back in 2005. The figure represented 65.9% of Macau’s total GGR for the year of MOP$361.87 billion (US$45.3 billion), only slightly down on the 72.9% of gaming revenue VIP contributed two years earlier. Both are records unlikely to be broken anytime soon.

                                              Since 2014, the VIP sector has seen its influence gradually subside, dropping below 60% for the first time in 2015 and from 54.7% in 2018 to an all-time low of 46.1% last year. Heavily impacted by China’s 2014 anti-graft campaign, which effectively slashed the pool of high-rollers coming to Macau, junkets and operators have not only seen their VIP volumes subside, but have also endured a lengthy period of consolidation – from 235 licensed junkets in 2013 to 141 three years later and just 95 as of 2020.

                                              Likewise, casino operators have gradually shifted their focus away from the once endless riches of the VIP biz towards the higher-margin mass and premium mass segments, both boosted by growing visitation to the Macau SAR (reaching a record 39.4 million in 2019).

                                              Yet, as all eyes look forward to 2021 and, hopefully, an end to the COVID-19 pandemic that has left the global gaming industry rattled, any suggestions that the junket industry is on its last legs couldn’t be further from the mark.

                                              “The industry is hurting right now, and junkets are no different, but rest assured it is VIP that will drag us back,” says Niall Murray, Chairman of IR consultancy firm Murray International Group.

                                              Often demonized and certainly misunderstood, Macau’s junket industry has a long and sordid history that has sparked caution from regulators in Nevada and Singapore, and most recently Australia. But while some jurisdictions shy away, Macau has embraced the troubled beginnings of its junkets – utilizing past experience to strengthen regulations while simultaneously establishing itself as a global economic powerhouse.

                                              And the numbers don’t lie. Even accounting for the challenges it has faced in recent years, Macau’s VIP sector contributed GGR of MOP$135.23 billion (US$16.93 billion) in 2019, more than twice the gaming revenue of either Las Vegas or Singapore, and four times that of the Philippines.

                                              Rather than the decline of junkets, the 2004 birth of Macau’s integrated resort era has sparked an ongoing evolution.

                                              HUMBLE BEGINNINGS

                                              In the May 2020 edition of Inside Asian Gaming, former gaming regulator and consultant to the Macau SAR Government David Green took aim at critics of Macau’s junket license regime, stating, “Their normative pronouncements about what constitutes good-practice regulation pay little to no regard whatsoever to history, context or relevant public interest.”

                                              That is, to fully grasp the how and why of Macau’s modern-day junket system, you first need some reasonable understanding of the historical events that led it to this point.

                                              The concept of marketing Macau’s gambling industry to players in Hong Kong or China dates back at least two centuries and likely much further than that. As outlined by Hong Wai Ho in a detailed 2018 paper examining the evolution and regulation of junkets, the first seeds of what loosely resembled today’s VIP modus operandi sprouted in the 1930s when Macau authorities granted Tai Heng Company the monopoly license to operate the popular local game fantan. To attract players to their casinos, Tai Heng employed the services of gambling recruiters known as Jin-Ke (literally meaning “introducing customer”), who would organize visits to Macau for groups from surrounding regions.

                                              When, in 1962, Stanley Ho’s Sociedade de Turismo e Diversões de Macau, SA (STDM) won the city’s exclusive casino concession, Jin-Ke shifted its focus to becoming a key source of business for the new Ho empire.

                                              It was 1970, following the opening of STDM’s iconic Casino Lisboa, when the junket business took a giant step towards becoming what it is today. Lisboa, at the time considered the height of luxury, proved to be a cash cow for STDM, attracting a growing number of visitors from Hong Kong who would traverse the 66km stretch of water between the two territories using the STDM-owned ferry service. But it also attracted the attention of local triads, who cornered the tourist market by buying up ferry tickets in bulk and then selling them to customers at an inflated price. This quickly created a situation where no one could come or go from Macau without engaging the services of these ticket scalpers.

                                              STDM founder Stanley Ho. Photo by Chan Hin Io

                                              To solve this growing problem, Dr Ho proposed a new arrangement by which he would allow these scalpers to bring players into his casinos provided they stopped buying up ferry tickets. The deal allowed for these individuals – who became known as Daa Maa Zai or “chip rollers” – to sell non-cash chips, also known as dead chips, to players in return for 0.7% commission on all chips rolled (played) at STDM’s tables. A similar rolling chip model remains the primary method of play for VIP customers in Macau casinos to this day.

                                              It was also Casino Lisboa that introduced the first VIP room designated specifically for the use of junkets. Faced with a revision to Macau’s gaming tax laws following the 1974 inauguration of Governor Garcia Leandro, who imposed a new tax on gaming revenues rather than the annual concession fee system previously in place, Dr Ho pushed to increase revenues by recruiting more Daa Maa Zai. But having so many of these chip rollers working independently created problems of its own. The solution was to offer use of an exclusive VIP saloon to some of the more powerful and trusted Daa Maa Zai, who would in turn be responsible for a larger group operating under their watch. The success of Diamond VIP Room, opened at Casino Lisboa in 1986, laid the platform for the hundreds of VIP Clubs operated by junkets at Macau casinos and across Asia-Pacific today.

                                              CREDIT CRUNCH

                                              It was during these early days of junket rooms opening within STDM’s casinos that loan sharking became far more prolific. Prior to 2004, when Macau authorities introduced the first gaming credit law, it was illegal for STDM as the sole casino concessionaire to provide credit for the purposes of gambling, and so it fell to the Daa Maa Zai to arrange such deals with players directly.

                                              But problems quickly emerged. First of all, as more money was handed out to players on credit, debt collection became an increasing issue due to its lack of enforceability in mainland China.

                                              As Green explains, “The junkets themselves were reluctant to extend large volumes of credit because they had problems with collection, and upstream the casino operators weren’t particularly happy to fund them either, so the initial market that these guys were tapping into I would describe as an opportunistic market where people would come over the border, be met by some bloke who would say, ‘I’ve got a deal for you’, and he would sell them chips for cash.

                                              “If he knew them he might say, ‘Put it on tick, I’ll take something out of your cash chips and we’ll convert your initial winnings back into dead chips so I get my commission from the chief junket man,’ and so it went on.

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                                              “It was almost like a pyramid selling scheme where the whole thing cascaded down to agents going in all directions.”

                                              Having so many agents competing for business became an even bigger problem for Macau itself, particularly as such dealings inevitably increased competition between the two main triads – 14K, led by Wan Kuok “Broken Tooth” Koi, and Shui Fong, led by Lai Tong Sang. Tensions quickly escalated and by the late 1990s had developed into a full-scale turf war.

                                              “By this stage there were 10,000 of these characters hanging around the city, and that’s when the trouble started, with people shooting each other over customers,” explains Murray.

                                              “In the end it was Stanley Ho himself who sorted out the warring factions. He said to them, ‘Listen, stop shooting, put down your guns; we’ve got an operation for you, so start doing business in the hotel and stop fighting. It’s up to you to decide if you want to ruin this opportunity. You bring in the players, we’ll sort out the license, we’ll provide the dealers, we’ll provide a fair game. Knock yourself out by bringing in as many VIP players as you like.”

                                              Nevertheless, by the time the newly formed Macau SAR announced plans in 2001 to end STDM’s casino monopoly and offer up to three gaming concessions in an international tender, it had become abundantly clear that the junket business needed some form of proper regulatory oversight.

                                              LAW AND ORDER

                                              Junkets, officially referred to as gaming promoters, were first incorporated into Macau gaming law 16/2001, which outlined specific requirements for the operation of these promotors including tax liabilities and certain obligations required of official company representatives.

                                              “Games promoters,” the law states, refers to “the promotion agents of games of fortune in casinos, that carry out their activity by offering facilities to players, namely in what refers to transports, lodging, food and entertainment, receiving from a concessionaire a commission or other remuneration as payment.”

                                              Anticipating the award of gaming concessions to new operators the following year and the inevitable presence of junket rooms within their premises, Law 16/2001 stipulated that the activity of gaming promoters would be subject to licensing and government inspection and that they must register with each concessionaire where they intended to operate, that a list of all “collaborators” or agents up to a maximum number must be submitted for DICJ approval and, most importantly, that all directors, main employees and anyone holding 5% or more of the company’s capital stock must pass a probity check and be deemed a suitable person.

                                              For their part, concessionaires were given primary responsibility for keeping their junket partners in line by supervising their activity to ensure compliance with the legal rules and regulations.

                                              It was also up to concessionaires to withhold tax due on commissions or any other remunerations paid to the gaming promoter calculated on GGR originated by the player. The tax rate on these commissions or other remunerations was set at 5% (later altered to 3% but since 2007 back to 5%).

                                              The Gaming Promoters’ Regulation (6/2002), published the following year, provided a more detailed description of laws governing gaming promoters, including licensing requirements and circumstances under which junkets and concessionaires could be fined or, at worst, have their licenses revoked. Among its key provisions was that junkets were to be licensed annually, that they were to cover the full cost of probity checks by way of a MOP$100,000 advance deposit, and that the managing director must own at least 10% of the company’s registered share capital.

                                              It also required that all shares in a junket company be held by a “natural person” – a measure that effectively excluded licensed junkets from being listed on the Hong Kong Stock Exchange (non-junket operations are another matter).

                                              The real game changer for junkets, however, was implementation of the Gaming Credit Law in 2004, which for the first time provided a legal provision for concessionaires and junkets to provide credit to players.

                                              Crucially, it also made it clear that gambling debts accrued via such legal issuance of credit were fully enforceable in Macau – a provision which ultimately cemented the long-term relationship between operators and junkets and saw the latter move off the streets entirely and into the glitzy VIP rooms of today’s integrated resorts.

                                              This last provision didn’t necessarily solve the problem of recouping debts from players based outside of Macau – and certainly not in mainland China – but there has been some progress since, with Wynn Macau winning a landmark 2013 court case in which Hong Kong’s High Court enforced a HK$14 million (US$1.8 million) gambling debt against one of its own citizens.

                                              As Green notes, implementation of the credit law was transformative for Macau’s gaming industry.

                                              “The credit law really allowed the casinos themselves to provide front money for the junkets on credit,” he explains.

                                              “Mind you, they underpinned their risk by requiring the junkets to deposit fairly substantial amounts with them, but even so there was a degree of risk there, and then the junkets themselves were able to leverage that availability of credit and the front money they had with those casinos to go and recruit higher value players.

                                              “What this meant too was that your chip runners and others moved indoors. They moved out of the shadows of the street and moved into the casinos and literally became the people that would run chips between the VIP room cages and the tables, just taking the winning chips and taking back dead chips until the guy had met his obligation to roll his front money.”

                                              Green notes that, by necessity, Macau’s oversight of gaming promoters is somewhat “looser” than might be expected in the stricter gaming jurisdictions of the United States or Australia, however the fact that junkets have moved off the streets and directly into IRs has forced the operators themselves to pay closer attention to what’s going on.

                                              “As long as [junkets] are required to operate under contract with concessionaires, the concessionaires provide an important control on their operations,” he explains.

                                              “The standard junket agreement now requires that they provide all of the information required for AML filings, that they comply with directions from the concessionaire and particularly comply with their internal control requirements, so you’ve really got an additional layer that is not formal regulation, but clearly it is in the interests of the concessionaires to ensure that the junkets are compliant. There have been a number of instances where junkets have been terminated (by concessionaires) for non-compliance and moved on.”

                                              That Macau’s concessionaires haven’t ploughed more resources into expanding their own VIP-direct programs at the expense of junket play ultimately comes down to this issue of bad debt and the fact that irrecoverable money cannot be offset against GGR for the purposes of calculating gaming tax.

                                              Nevertheless, they were handed a reminder of the need to maintain close oversight of their junket partners in 2018 when the Court of Second Instance (TSI) ruled that Wynn Macau Ltd was jointly liable for a HK$6 million (US$774,000) investor deposit stolen by an employee of junket operator Dore Entertainment Co Ltd in 2015. The sum formed part of a much larger theft by the employee, estimated to be somewhere in the vicinity of HK$700 million (US$90 million), which led four investors to file lawsuits against Wynn and Dore.

                                              While only one of those proved successful, the TSI’s ruling made it clear that a concessionaire is to be considered jointly liable with any gaming promoter conducting activities within its casinos for any damages the junket causes to third parties.

                                              According to a summary provided by Macau law firm MdME, “This Court decision clarifies that … the legislator intention is to give more responsibility to concessionaires in controlling activities carried in their casinos by the gaming promoters, their directors and collaborators.

                                              “Therefore, it concluded it is reasonable and logical to require them to supervise these activities, as well as to assume a joint responsibility with the gaming promoters, their directors and collaborators in event of liability arising from the acts performed by them. If the gaming concessionaire does not fulfil its supervision duty, allowing or tolerating the gaming promotor to develop this kind of activity in its casinos, joint responsibility for the damages caused by that activity shall not be excluded.”

                                              It is with such joint responsibility in mind that Macau’s Anti-Money Laundering (AML) laws, first implemented in 2006 and tightened as recently as 2019, are applied to both operators and gaming promoters. Requirements under the AML law include customer due diligence obligations, enhanced monitoring of play by politically exposed persons, identification and reporting of suspicious transactions, an obligation to refuse to carry out transactions when mandatory information is not provided, and various record-keeping obligations.

                                              One further important piece of junket-related legislation was passed in September 2009, which specifically protected the interests of operators by capping commissions paid to gaming promoters at a maximum 1.25% of rolling chip sales. The Gaming Promoters Commissions Regulation 27/2009 was in response to lobbying from operators after Melco PBL Entertainment (Macau) Limited, the joint venture between Melco Resorts and Australia’s Crown Resorts, announced the signing of a gaming promotion agreement with local junket Ama International Limited that saw Ama agree to supply VIP business exclusively to Crown Macau in return for a 1.35% commission. There had been talk of operators paying commissions as high as 1.50% due to fierce competition in the sector, forcing operators to take a hefty hit to their margins if they wanted to attract any VIP business to their properties at all.

                                              Today, a 1.25% commission paid to junket operators on rolling has become standard practice.

                                              In Part 2 of our deep dive into junkets, which will feature in the October edition of Inside Asian Gaming, we’ll explain how standard gaming promotion agreements between junkets and operators work. We’ll also look at Macau’s “Big 3” junkets including detailed lists of their current VIP Clubs, and explain how many of these larger junkets have transformed themselves in recent years at a time when the VIP industry faces growing consolidation.

                                              Tags: anti-money launderingCasino LisboaCurrent IssueDICJJunketsSTDMVIP gamingWynn Macau
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                                              Ben Blaschke

                                              Ben Blaschke

                                              A former sports journalist in Sydney, Australia, Ben has been Managing Editor of Inside Asian Gaming since early 2016. He played a leading role in developing and launching IAG Breakfast Briefing in April 2017 and oversees as well as being a key contributor to all of IAG’s editorial pursuits.

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