For months, after the criminal prosecution of Suncity and Tak Chun and their main directors, first in Wenzhou and other cities in Mainland China, then in Macau, casino gaming concessionaires closed VIP Rooms and several analysts sentenced that VIP gaming in Macau was dead.
I’ve repeatedly pointed out that such an approach was neither realistic nor likely.
First, because if that was the case, if the new Macau SAR policy on casino gaming wanted to eradicate VIP gaming, the Law on Credit for [Casino] Gaming (Law no. 5/2004) would have been clearly amended to remove the possibility of licenced gaming promoters / junkets granting credit for casino gaming credit. Said amendment did not take place at the time of the last tender for casino gaming concessions, when the Macau Legislative Assembly and the Macau Government amended several casino gaming laws and regulations. There is a Bill amending said Law pending in the Macau Legislative Assembly but it does not remove the possibility of licenced gaming promoters / junkets continuing to grant credit for casino gaming. The Bill imposes some restrictions (we’ll return to this subject in a coming article), but that is it. Considering that it is unlikely that the Macau legislators and members of the Government do not know what Macau casino gaming credit entails, clearly the intention was not to destroy one of the main sources of gross gaming revenue (GGR) generated, and consequently, one of the main sources of Macau Government fiscal revenue.
Second, the main reason why Macau junkets started to operate in markets where casino gaming-related activities were, [at the time,] not only unlawful but a crime (e g, Mainland China, Thailand, Japan), lied on the need to avoid exposing the Macau casino gaming concessionaire(s). This situation remains unchanged, namely as regards the most relevant market (Mainland China) where visitation comes from; Macau casino gaming concessionaires cannot risk venturing into the direct gaming promotion for VIP patrons from Mainland China. The underlying risk for their concession and the possibility of incurring in operations violating the law might not bode well for the [required] suitability that these concessionaires and their mother companies need to have at all moments – in Macau and in other relevant jurisdictions. Not to mention the embarrassment for the Macau Government if, from time to time, employees of a casino gaming concessionaire were caught practicing [blatantly] crimes in Mainland China.
Third, the most relevant activity of Macau gaming promoters concerning Mainland China patrons is to grant credit for Macau casino wagering. Macau law does not allow any write-off of uncollectible credit arising from casino gaming credit, hence, casino gaming concessionaires have been sharing GGR with gaming promoters to compensate these for [taking the full] casino gaming credit granting risk.
Last, but not the least, the numbers.
The number of licenced gaming promoters in Macau continues to diminish. In January 2023 there were 36 gaming promoters, a fall from 46 in January 2022, according to the latest updated list of licensed operators published by the Macau SAR Gaming Inspection and Coordination Bureau (DICJ).
Prior to the pandemic, Macau VIP GGR in 2019 – taking “Baccarat VIP” numbers as reference – was 135.2 billion HKD (46.2% of total tables games’ GGR). Since Baccarat’s win is c. 3%, and assuming side betting of at least the same amount of wagering in VIP rooms, the overall amount wagered in Macau VIP Gaming in 2019 was above one trillion US dollars. The vast networks of companies and associated entities from Mainland China (Macau gaming promotion companies are minor players and are fungible) that have been running this profitable business are not likely to abandon this sizable source of revenue.
In any case, the numbers for Q1 2023 are available and confirm our analysis. According to the DICJ webpage, “Baccarat VIP” in Q1 2023 was 8.565 billion HKD (24.7% of overall GGR, 26.6% of total table games’ GGR). Not bad for a dead VIP gaming segment!
