Junket twist

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Junkets are an important engine of Macau’s gambling-centred economy.
Confirmed trends of higher VIP spending for several months in a row make the junket position and business economically justified and strengthened.
Essentially, junkets operate in the lending business. This involves opening credit lines to high-end clients – mostly from mainland China – and collecting debts.
Accordingly, big operators such as Suncity, Neptune, and Tak Chun move large resources around town and abroad.
Because of their financial links with China and elsewhere – the Philippines, South Korea and Vietnam to name a few – the junket business is both local and international in nature.
It is a trend that well-capitalized companies in the sector are gradually increasing their international profiles, while seeking diversification of activity by investing more in other trades, such as casinos, entertainment, and the so-called concierge services.
Hong Kong-listed Suncity Group, which is said to operate half of the VIP rooms in Macau, has recently announced plans to bid in Japan, possibly in partnership with Las Vegas Sands Corp. and Wynn Resorts Ltd., in a minority stake ranging from 10 to 20 per cent.
Because it is highly unlikely that local junkets will secure a casino operator license here in Macau – due to administrative bottlenecks and sensitive political reasons – they are bidding outside.
Alvin Chau’s company took the first step when it decided to develop an Integrated Resort in Hoi An, Vietnam.
Neptune recently announced it was moving its business focus from VIP rooms to the lending business proper. Though the service is not new, the approach is.
Neptune – whose most recent change has been to propose a new name, Rich Goldman – controlled several VIP rooms in the Venetian Macao, which were terminated this year.
As for Tak Chun Group, it has started channelling some money to the arts. An agreement signed with a local art space, Art Garden, effective last Friday, entitles the space to over MOP1 million per year for a period of five years.
What is interesting about Tak Chun’s deal is that it is penetrating a field for which funding was nearly exclusively raised by the government – even though, at the end of the day, it is gambling money being re-directed to support artistic and cultural activities.
Such moves and new strategies send strong signs about Macau’s positive economic outlook and local companies’ capacity to re-invent themselves.
A little twist with a big impact on accounts and image.