Revision for junket bylaw needed

‘Politicians need to discuss and decide if it makes sense to allow junkets to remain a subculture or if they should bring them into the gaming business,’ said lawyer Luís Melo

The regulation applying to VIP gaming promoters, known as junkets, must be revised to increase both supervision and transparency, lawyer Luís Mesquita de Melo said yesterday during the Global Gaming Expo (G2E) Asia 2011.
The existing bylaw covering junket activities came into effect on April 2002 and “it has some teeth, maybe baby teeth,” the former executive vice president of Sands China said.
But, “since 2001, there is a lack of political debate in relation to the gaming industry, and in particular to the junket business,” he stressed. The junket business model has evolved, becoming “more sophisticated”.
It’s time to improve legislation as well, Melo said during the ‘VIP Vision: How Junket Work Across Asia’ session, starting with “imposing more obligations on junkets, namely on information disclosure”.
The 2002 bylaw “has some very good principles that were never the target of detailed regulation” but “it doesn’t go far enough on how to deal with interests not written down in formal documents,” he explained.
The regulations “somehow dilute the responsibility between junkets and operators, which allows for a lot of sub-junkets that don’t go through the licensing process,” the lawyer reproached.
Several gaming concessionaires, have signed revenue sharing agreements with junkets in which “there is definitely an element of sub-concession,” he said.
But if the supervision of gaming operators “doesn’t extend to business partners, you create some sort of disruption,” Melo warned.
“Politicians need to discuss and decide if it makes sense to allow junkets to remain a subculture or if they should bring them into the gaming business,” he said.

Dancing Water turning a profit

‘The House of Dancing Water’ show has been turning a profit and operator Melco Crown Entertainment expects to get its investment back “within 10 years”.
The HKD 2 billion show opened at the City of Dreams resort last September and so far received over half-a-million spectators, Melco’s vice president for entertainment and projects Sunny Yu, said yesterday.
And the attendance rate at the 2,000 seat purpose-built Dancing Water Theater “is still above 90 percent”, he added during a seminar at the Global Gaming Expo (G2E) Asia 2011.
Asked if the Cotai show was turning a profit, Yu declined to reveal any numbers. However, he confirmed that Dancing Water “is in a very healthy mode” and that its revenue “is covering all operating expenses”.
“If it continues doing great, within 10 years we will get our investment back,” the executive predicted during the ‘Non-Gaming Amenities: Something for everyone’ session.
During the same session, Niall Murray claimed “expensive production shows don’t work” in Macau. The SJM executive pointed out that Dancing Water alone cost more than the whole Sands casino.
Rival operator Sands China, where Murray worked as well, was forced to revamp Cirque du Soleil’s ‘Zaia’, after the new circus show faced stuttering turnout figures.

No goldmine

The relation between junkets and the gaming regulator should also be more transparent.
“Most of the rules [on VIP gaming promotion] come from DICJ [Gaming Inspection and Coordination Bureau] instructions that are never made public,” the former executive stressed.
He believes it’s possible to implement the same kind of “strict scrutiny” in Macau of licensing junkets as in Singapore, considering that many VIP gaming promoters are now looking to go public.
“It’s the only possible way to move forward,” Melo said.
“Western investors are interested in buying into junkets,” Ben Lee said on the sidelines of the same session. “They see it as a virtual casino without the huge brick-and-mortar investment,” the former vice president of casino marketing at Venetian Macau added.
Samuel Tsang agrees that most investors “don’t understand the risks” of running a junket. For instance, he told Macau Daily Times, the percentage of the bets paid back to VIP gamblers is increasing to “an average of one percent”.
In addition, “if clients win they want to collect right away but if they lose they always ask for some time”. And, the Century Legend Group chairman emphasised, gambling debts are still not recognised in mainland China, where most gamblers come from.
“Junkets are not making as much money as outsiders may think,” he said on the sidelines of the session.
Tsang also downplayed the existence of illegal side-betting in Macau, which according to a United States Department of State report could outnumber reported revenue of the local gaming industry.
“Side-betting may exist but the motivation comes from the customer side. And, if a junket gives into that pressure, he is taking a huge risk,” he warned.