Galaxy Entertainment Confirms No More Junket Ties in Macau

Posted on: January 20, 2022, 09:53h. 

Last updated on: January 20, 2022, 01:40h.

Erik Gibbs Read More

Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Junkets continue to see their share of the Macau casino scene shrink. Galaxy Entertainment is the latest to confirm it is no longer dealing with the junket segment.

Long before Suncity Group fell out of favor in the Asian gaming community, junkets were already running into trouble. When Suncity, once the largest junket operator in the region, fell last year, the market went into meltdown. Galaxy Entertainment is the latest to confirm it is no longer working with any of its former promoters.

At one point, Galaxy was one of the primary gaming companies to work with junkets. However, it has confirmed to GGRAsia that those days are in the past.

A representative of the company told GGRAsia that “There are no gaming promoters currently operating at Galaxy Entertainment Group.”

Casinos, Junkets Continue to Sever Relationships

The apparent break-up follows that of Wynn Macau and Melco Resorts and Entertainment. Both said in early December that they were going to shut down their junket VIP rooms in Macau. It’s unclear if the remaining casino operators – MGM China Holdings Ltd, Sands China Ltd, and SJM Holdings Ltd – have taken similar action.

The loss of the junket ties at this point is almost nothing more than a formality. Gaming revenue delivered through junket channels was already sliding in Macau before they were sent away.

Data from the city’s gaming regulator shows that VIP revenue in the third quarter of last year was just 31.8% of the overall total. That was a drop from the 50% recorded in 2019. In the fourth quarter of 2021, the figure fell to 25.7%. All of those percentages reflect the severe impact of the pandemic and its accompanying restrictions.

Restrictions Coming to Future Junket Operations

Junkets aren’t directly being forced out of Macau. But the city is making their lives difficult. With the new gambling laws that are now on the table, a junket will only be able to work with one casino licensee.

More restrictions are likely. The draft gambling law stipulates that junkets and sub-agents will have to be licensed. This means that, in theory, a license application could be denied.

Junkets won’t be allowed to operate any form of gaming activity in a casino. They are also not able to establish any type of revenue-sharing agreement with their casino counterpart.

Previously, junkets had several ways of making money off their operations. One was through a commission paid by the casino on rolling chip turnover. This was typically 1.25%; however, things are going to be different going forward.

Junket Transparency is Expected

Anyone involved in a junket or sub-agency will have to be identified and licensed in Macau. This could cause some friction at first. No one in the segment can be associated with more than one entity in the gaming industry.

Macau has stated in its draft gambling law that commissions will be established as part of the new laws. In addition, regulations for junket and sub-agent operations will be drawn up and included.

The new controls will lead to some of the existing junkets calling it quits. Those that remain will have to prepare to adjust their standard operating procedures if they expect to be commercially successful.