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Economic diversification of junket business

A rise in junket operations by smaller companies targeting the newly rich suggests the sector is competitive and diversifying, although a proper regulatory system is the best way to keep the activity under control, according to specialists

Smaller upscale junket operators are picking up steam in the MSAR, says gaming publication GGRAsia.
New VIP operators have opened rooms in the L’Arc, a casino in NAPE run by Angela Leong, as well as in David Chow’s Legend Palace Hotel, while another decade-old junket, David Group, has started operations in the newly opened Macau Roosevelt Hotel, as well as in Studio City and Galaxy.
Ricardo Chi Sen Siu, Associate Professor in Business Economics at the University of Macau, said in a response to Business Daily that he perceives this as “a new business model to approach more upper middle-class clients with different social networks and characters.”
David Group, for instance, just launched its WeChat platform a month ago, while social media platforms have also become popular tools to operate proxy betting schemes in the city.
Several raids by local Judiciary Police against illegal VIP rooms connected to casinos in town – of which the most recent took place last week, when a ring in ZAPE was busted on August 2 – have been using social media channels to connect clients with operators.
Tencent-owned WeChat is often the preferred platform for this type of activity.
Smallers cale junket operators targeting upper middle class clients have existed to some extent before but suffered a series of drawbacks when Xi Jinping launched a national anti-graft campaign in 2014, making the junket business a preferred target in Macau.
Accordingly, smaller junket companies such as David Group shrank their operations in 2015.
One major advantage of running smaller scale junket operations, when compared to big groups such as Suncity and Neptune, “could be diversifying the sources of contacting and marketing, hence lowering the traditional risks as the market [is] dominated by a few large junkets with [non-transparent] transactions,” Siu opines.
Another advantage of a pickup in the smaller junket business is that they signal there is more competition, which “could be a good sign for the industry’s development,” the professor said.
“However, due to the nature of this business, benefits from running more smaller scale junkets are largely subject to an effective regulatory system. Otherwise, the downsides may be high, because irregular activities in competition may be hardly controlled/supervised,” he told Business Daily.