Earlier today, analysts at Credit Suisse AG, a Switzerland-based provider of various financial services, pointed out that the expected closures of junket operators in Macau might have serious impact on premium mass revenue and might also hurt the funding channels of players.
Prominent gaming experts Isis Wong and Kenneth Fong said in their note that liquidity is still “very tight” and that more junkets are expected to shut down after February 19, when the Chinese New Year is to be celebrated. According to them, this might have quite a negative effect on mass market revenue, due to the fact that many VIP players and premium mass ones are overlapped.
The analysts estimated that Macau’s premium mass constitutes 35% to 40% of the overall mass gaming revenue.
Ms Wong and Mr. Fong pointed out that a slower VIP growth imminently leads to slower growth of the premium mass market segment. In addition to this, a decrease in the number of VIP players will make it difficult for premium mass hosts to find new players. The experts attributed this to the fact that the VIP market is one of the main sources for attracting premium mass players.
According to the Credit Suisse analysts, the closure of junket operators and VIP rooms would mean that premium mass players will have fewer opportunities to transfer their money. Generally speaking, they tend to avoid using the so-called UnionPay cards, due to the more thorough monitoring of substantial transactions. Instead, they resort to junket operators in order to transfer their money to China more easily.
Ms Wong and Mr. Fong pointed to the fact that certain junkets are popular in particular Chinese regions/provinces. This is why the remaining operators might not be able to fill the gap caused by those who decided shut down their operations.
On January 31, 2015, David Group, one of the most popular junket operators on the territory of Macau, closed three of its seven VIP rooms. Gold Moon Group, a smaller junket company, also announced its decision to close its VIP room at Sands Cotai Central.
The Credit Suisse analysts also commented on the fact that at present, the advanced booking for the Chinese New Year has been quite disappointing and will most probably lead to a decrease in this month’s revenue.
At present, experts predict that gaming turnover might reach the amount of MOP66.7 billion or US$8.3 billion in the first quarter of this fiscal year, which is 12% less than what was posted a year ago.
