Inside Asian Gaming

www.asgam.com EDITORIAL Ben Blaschke Managing Editor We crave your feedback. Please email your comments to bb@asgam.com. Junket jitters I t’s hard to imagine any more challenging time for Asia’s VIP junket industry than 2020. That seems quite remarkable given the devastating impact China’s anti-graft campaign had on the sector in 2014 – stripping away two-thirds of its gross gaming revenue and forcing a period of consolidation that has seen the number of licensed junket operators in Macau fall by some 60% in the six years since. But in a blow to the partial recovery that has been staged in recent years – albeit not to the same lofty heights as before – 2020 has brought with it threats on multiple fronts. The most devastating of these has obviously been COVID-19. By forcing the closure of casinos worldwide and putting a halt to international travel, the pandemic has left gaming jurisdictions around the world, including many in Asia, with little to no business from which to generate profits. In Macau, the one saving grace heading into the back end of 2020 was supposed to be VIP – seemingly the perfect fit for a COVID world where social distancing and limits on players allowed at gaming tables have become the norm. Instead, the reopening of Macau’s borders with mainland China has coincided with a renewed crackdown by Beijing on cross-border gambling activities that is severely limiting the number of “big” players able to enter Macau and their access to funds should they do so. Macau’s casino operators are not believed to be the focus of China’s wrath, with China’s Ministry of Culture and Tourism announcing in August that it had established a “blacklist” of overseas tourist destinations it said were disrupting the nation’s outbound tourismmarket by opening casinos targeting mainland Chinese customers (think Philippines, Cambodia and Vietnam). Nevertheless, the limitations this places on the ability of junkets to access funds for their players inevitably hits Macau’s hip pocket too. It is expected that this campaign by China will run for the next three years, in which time we can expect to see much more consolidation within the junket industry as smaller promoters fall by the wayside amid greater competition for fewer players. So what does this mean for the future of Macau’s VIP sector, and specifically the contribution of junkets? Its harshest critics claim the days of the junket are numbered, citing tightening regulations and a focus by both the government and operators on the higher- margin premium mass segment. More likely is that the industry will live on but with more consolidation to come. As the likes of Suncity and Guangdong Group have shown by moving into real estate, money lending and even their own casino operations, diversification will also be key. The junket industry today is almost unrecognizable from the one that was still working Macau’s streets little more than 20 years ago. I suspect junkets 20 years from now will look very different again.