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Macau Authorities Stand Their Ground with Latest Ban on Casino Credit Lending Practices of Junket Operators

Earlier this month, the Legislative Assembly of Macau revealed its plans to bring serious amendments to the special administrative region’s gambling credit law in an attempt to eliminate potential conflicts with the ongoing changes in the regulation of local junket operators via the introduction of a new piece of legislation.

At the time when the discussions on the new bill, called “Legal Framework for Operating Games of Chance in Casinos”, also known as “the new junket law”, were held at the beginning of May 2022, the Legislative Assembly’s Second Standing Committee made a reference to Article 60, according to which regulation of credit in casino venues will be subjected to its own legislative framework. According to some media reports, these laws reference the gambling credit law of Macau, No.5/2004, which currently states that both junket operators and concessionaires are allowed to take part in credit lending practices.

Chan Chak Mo, the chairman of the aforementioned Committee, shared that the gaming credit law needs to be changed in a way that would match the new bill, which specifically states that player deposits can be accepted by concessionaires only. The Committee chair further noted that, in the future, junket operators would only be able to attract gamblers to the casino and exchange chips but they would not be able to place any customer deposits with the concessionaire, as these actions matched with the original purpose of the law in making sure that the local gambling industry develops in a healthy manner.

Macau Authorities Looking for Alternative Revenue Sources to Cut Dependency on Gambling Services

The Covid-19 pandemic outbreak forced the special administrative region’s authorities to start looking for alternative revenue sources, considering the fact that most of its gross domestic product (GDP) relies on casino concessionaires.

However, this dependency on the contribution of gambling operators is set to change, as the Government of Macau has been looking for other revenue channels. The authorities in the special administrative region are investing more efforts into introducing more transparency to the sector, and there have been some concerns about the interaction between casino operators and customers. At the beginning of the month, local legislators introduced a piece of legislation called Legal Framework for Operating Games of Chance in Casinos, which involves several important changes, including one under which casinos will handle players’ deposits.

Historically, so-called junkets were able to accept money on behalf of casinos and make deposits with gambling venues. In the last few years, however, a number of VIP players filed legal action against casinos, which raised some questions about players’ deposits and how they were not reaching their intended target. This is exactly why the proposed changes in the local gaming credit law are aimed at making casinos the only entities that are given the right to handle deposits without the involvement of any intermediaries.

Each Macau Junket to Be Given Chance to Collaborate with One Casino Only

The newly proposed piece of legislation features some important aspects regarding the operation of junkets on the territory of Macau. According to some experts, no precise predictions can be made about this, because it would depend on local demand. A large number of local casinos have already noted that they would prefer to eliminate the intermediaries rather than be stripped of the chance to monitor their operations at all times.

A large number of casinos have justified such a measure with fears that some illegal moves of their junket partners could lead to serious complications of the situation for them when it comes to Macau regulatory bodies.

For some time now, junket operators have been losing momentum in the special administrative region of Macau. So-called private VIP rooms are set to also disappear due to the stricter rules imposed on the sector, as casinos would no longer be able to allow the operation of dedicated high-roller rooms under the junket firms’ branding within its premises.

Of course, the recently unveiled restrictions have triggered mixed reactions regarding the expected impact of the tougher measures on the casinos’ performance and financial results. In theory, eliminating intermediaries could help gambling companies in Macau boost their revenue, but in order for this to happen, they will have to match the visitor traffic.

Moving forward, each junket operator will only collaborate with a single casino licensee, which also aims at tackling the number of junkets in the special administrative region. For the time being, fewer than 40 junket firms have reapplied for such an operating license.

 Author: Harrison Young

Harrison Young is an experienced writer, who started his career almost 8 years ago. Prior to joining our team at CasinoGamesPro, he worked as an editor for a small magazine.