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Up to 30% of junket businesses in casino hotspots in Macau may soon abandon the market's traditional high-value VIP segment to focus only on customers more interested in premium public gambling entertainment.

This is the belief of global investment research firm Sanford C Bernstein Limited, following last week's news that junket giants Tak Chun Group and Suncity Group suffered from the unilateral cancellation of contracts with six licensed casino operators in Macau, according to a report by Inside Asian Gaming. The source detailed that the latter company recently made headlines after its chief executive and largest shareholder, Alvin Chau Cho Chuck Wa, was arrested in China for allegedly helping to promote illegal cross-border gambling.

Macao is now home to about 85 junket companies known to promote partner casinos to wealthy gamblers, while also dealing with such individuals' travel, lodging, foreign banking, or credit demands for amounts that could amount to millions of dollars. However, the number of such local companies has reportedly been steadily decreasing since peaking at 235 , driven by allegations that they may often be related to immoral individuals and organized criminal gangs.

In a report submitted this morning, analysts Kelsey Zhu and Vitaly Umansky at Sandford C Bernstein Limited reportedly predicted that 15% to 30% of existing junket companies in Macau would soon be interested only in the premium public sector of the local gambling market. In addition, experts predict that other high-paying individuals could move directly to casino-run VIP programs, completely excluding middlemen.


"With the disappearance of the junket business, it will be natural for some businesses to transition, and we expect 15% to 30% of the junket VIP business to be able to transition back to premium direct sales and premium mass. The disappearance of junkets will also have a negative impact on premium mass, and we estimate that the liquidity of junkets can cause between 10% and 25% of ultra-premium mass and 5% to 10% of premium mass to disappear. However, parts of the junket business are likely to move to premium direct sales, and some sectors may be negatively impacted by the disappearance of junket liquidity."


Nevertheless, the two are quoted as saying to operators behind Macau casinos that they may prove positive for Macau's gambling market by increasing stability and increasing direct income.