Despite the current upheaval in Macau’s junket industry, Edmund Loi Hoi Ngan, Associate Professor of the Social, Economic and Public Policy Research Centre of Macao Polytechnic Institute, believes that recent events do not point to the exclusion of junkets but rather establish a clear line in the sand that VIP gaming promoters must not touch online or cross-border gambling.
Following the arrest and detainment without bail of Sun City Gaming Promotion Company Limited’s sole shareholder, Alvin Chau, who is currently awaiting trial for alleged criminal association, illegal gambling and money laundering, Macau’s casino concessionaires recently began terminating contracts with junket promoters. The VIP gaming industry, which once generated the majority of Macau’s gambling revenue, is facing an unprecedented crisis.
However, Loi believes the current situation has eliminated some of the gray areas around the VIP segment, ensuring rules will now become clearer with less uncertainty. This in turn is conducive to the healthy development of Macau’s gaming industry, he said.
When he previously spoke with IAG in September, Loi said, “Due to its positioning as a gaming center, Macau has not been able to reassure the Central Government that it can avoid becoming a loophole of capital outflow.”
He now believes one of the ways to “reassure the Central Government” is by making two key adjustments to its gaming industry: reducing its reliance on the VIP sector and increasing non-gaming elements.
“The IRs are here already and as long as the clients are not organized to come [by operators or promoters), it is a normal operation. This way, the line is drawn so that everyone is clearer,” Loi said.
“For instance, after some concessionaires changed their name to indicate ‘leisure and entertainment’ (SJM’s Chinese name was changed to mean ‘Macau Leisure and Entertainment’ rather than ‘Macau gaming’), they were included in the promotional roadshows of Macau in mainland China (part of the MGTO’s ‘Macao Week’ promotion events). This also shows that such activities are allowed.”
Loi also notes that the closure of Macau VIP rooms and cessation of junket activities by the likes of Suncity and Tak Chun is not a declaration of “bankruptcy” and could be a case of promoters adopting a “wait and see” approach regarding how they can legally resume operations in future.
“After all, Southeast Asia still allows cross-border gambling,” he said. “Countries like Singapore, Thailand, Malaysia, South Korea and Japan are not opposed to cross-border gambling. The ways for junkets are not completely blocked, as long as they stay away from mainland China. I think the bottom line is very clear.”
Loi said that although both the Suncity and Dore Entertainment cases accelerated the shrinkage of Macau’s VIP segment, there still might be a gradual rebound once amendment to Macau’s gaming law are confirmed.
As for development of the gaming industry in the coming year, Loi believes Macau is still the world’s most promising gaming market at present despite the lingering presence of COVID-19.
“Although the statistics during the past two years are poor, they are still good compared to other jurisdictions,” he explained. “For example, despite the fact that Macau’s foreign investment dropped by more than MOP$50 billion in 2020, US capital still chose to enter Macau, which means that Macau’s gaming market is still the best in terms of the global market.
“Although it seems that the scale of Macau’s gaming industry will be somewhat limited to a certain extent in the future, on the whole, I think no gaming company would actually want to miss the opportunity to enter or stay.
“GGR bottomed out last summer, some uncertainties have now been removed and visitors have stabilized at around 30,000 per day. When things are stable, decisions can be made faster.
“The reason I’m optimistic about Macau is because I cannot find any better place.”