Macau Casinos Seek to Bypass Junket Operators
For years Macau’s casinos have relied upon junket operators that recruited rich gamblers from the mainland. However, now the junket operators are being cut out by companies such as Sheldon Adelson’s Sands China which performs the same services.
There are huge sums of money at stake for casinos in Macau. Macau is the world’s biggest gambling market and last year had revenue of $45.2 billion.A casino can make up to 15% more from a high-roller from the mainland if it hosts them itself rather than paying junkets to do the same job in exclusive VIP rooms leased by the casino. Some analysts have even said that the earnings may be up to 50% more. As Grant Bowie, the MGM China Holdings CEO, said, “Direct VIPs give us considerably higher profit margins”.
Because of the casinos’ new strategy junket operators are beginning to feel the pressure. Junket operators normally receive a commission for each high-stakes gambler delivered. On average the commission is 1.25% of the gambler’s rolling chip turnover.
According to data compiled by Bloomberg, last year junkets earned about 29% of Macau casinos’ total revenue.
Unsurprisingly the casinos are not happy about losing this much of their profits and as they gain more experience of operating in the Asian markets, they are likely to do more and more to bypass the junket operators.