With the Chinese authorities still dead set against gambling, especially that variety facilitated for high rollers by junket operators, the increasing VIP gambling revenues in Macau are a strange anomaly. Are the Chinese relaxing their stance or have they just got other things on their plate? Are the good old days here again or should we brace ourselves for another round of arrests? We take a look.
- Do expanding VIP gambling revnues in Macau signal a shift in Beijing’s position?
- Will there be another crackdown on junket operators in mainland China?
- Does the Chinese government intend to allow a return to the good old days?
- Will VIP gambling rises continue to outstrip Mass gaming revenues?
As Donald Trump made a speech in the UN that had the same diplomatic impact as Hurricane Maria did on Puerto Rico during which he threatened to start World War III, somewhat playing into the hands of 3rd rate Chairman Mao impersonator and fireworks fan Kim Jong-un of North Korea, there were smiles around the assembly. Every knows it’ll be China not the US that has to do something about Kim and as the VIP gambling revenues in Macau demonstrate, the Chinese line on gambling could be softening.
Chinese gambling laws are hugely strict, however since the dark days early on in the major crackdown on junkets to Macau and other gambling, typically by corrupt officials, the government of Xi Jinping seems to have mellowed it’s attitudes slightly with, for the first time, the VIP gambling revenues in Macau outstripping those of mass gambling, the assumed preference of the nominally Communist authorities, for the first time since 2011, the 26 month decline now a bad dream from which the casinos awake.
VIP Gambling Revenues In Macau Are Up But How Long Will It Last?
- VIP revenues +19% 1st 1/2 2017
- VIP revenues +30% 2nd 1/2 2016
- Mass revenues + 14% 1st 1/2 2017
- VIP revenues current – US$17.1bn
“If you think about it,” IgamiX Management & Consulting boss Ben Lee said recently, “who would you rather have lose their money? Poor working class Chinese or a handful of rich entrepreneurs who have a sustainable ability to make such losses?” It’s a good argument, but have the authorities really decided to turn a blind eye or are these increased VIP gambling revenues in Macau a temporary blip before the next round of arrests rolls across the region. With Xi Jinping you just never know what he’ll do next.
It won’t make Chinese gambling news headlines that Macau as a whole is still overly dependent on gambling. Non-gaming revenues are in single digits, making it vulnerable to the whims of Beijing and the temptation to believe these larger VIP gambling revenues in Macau are a sign happy days are here again may place the braver casino operators in an even more precarious position as they return focus to these Chinese high rollers, even as the mass gaming market comes under ever increasing pressure from the internet and sites like Bet365.
Wager On Sporting Events Across China At Bet365
The degree to which the ever more tech savvy Chinese market will break through the Great Firewall of China and use sites like Bet365 is still hotly debated, but there’s no doubt that will be a factor in the mass-gaming market moving forward and one both Macau and Hong Kong will have to deal with. VIP gambling revenues in Macau might have risen 19% in the first half of 2017 and whilst those that like to bet on sports in China might dive off to Bet365 online, the high rollers are going back to Macau.
“Macau’s casino operators cannot break free from the allure of the VIP segment. Granted, the margins are lower for VIP than mass gaming, but there is less risk.” Said Andrew Klebanow of Global Market Advisors, noting that the increased VIP gambling revenues in Macau rely mainly on junket operators to bring in business. The question is just how far will that business be allowed to expand by the pro-mass-market authorities? Just like with their response to the North Korea situation, we await with baited breath.