Casinos in Macau have been experiencing a steady decline in revenues for almost two years. One of the reasons is the decline in business generated from gambling junkets which attracted high rollers that contributed a large percentage of the overall revenue.
A recent report by University of Hong Kong sociologist T. Wing Lo and Department of Applied Social Sciences researcher Sharon Ingrid Kwok published in the British Journal of Criminology, titled Triad Organized Crime in Macau Casinos: Extra-Legal Governance and Entrepreneurship opinionated that the Chinese criminal underworld dominates the activity of the gaming junkets. The report validates suspicions that many have publicly suggested over the years related to ties between triads and casinos in the largest gaming hub in Asia.
Research for the report, which included 17 interviews with triad members, VIP operators, police, and mainland officials, along with visits to VIP rooms, took place over two-and-a-half years between 2012 and 2015.
The main conclusion from the study is: "The VIP-room operations are still dominated by triads to date. But they have readjusted their traditional intrusive role and reinvented harmonious business strategies to suit the market reality."
Furthermore, the study states that much of the income generated by the triads is related to the VIP activity taking place in many of the biggest casinos in Macau.
Macau casinos have begun to focus more and more on their mass-market business catered to everyday players in order to diversify away from income being driven primarily from its VIP rooms. That being said, the VIP business is a major driver not only to the Macau casinos themselves, but the parent companies that run them which own casinos in other locations around the world, including the gaming capital of the world, Las Vegas.
Macau Gaming Watch highlights how the junkets and VIP operators are dominating the income streams in the city's casinos in a report titled Wynn Macau Junkets & VIP Operators.
The report explains that even when removing "commissions and discounts," that 56 percent of total revenue generated by Wynn Macau during 2014 was generated via VIP gaming and accounts for 39 percent of the parent company's overall revenue.
This figure, however, isn't all related to external gaming junkets as the casino operates its own internal junket as well. In October 2013, a Wynn Resorts official testified to the Massachusetts Gaming Commission that the internal junket is quite extensive, employing "about 215 people internally" and "six international marketing offices that recruit customers and bring them to our property."
Casinos continue to deny that they are aware of the criminal underworld's involvement in the gaming circuit. Additionally the South China Morning Post reported that Macau's Gaming Inspection and Coordination Bureau also claimed they are unaware of triad involvement.
"So far, we have not verified any triads selected by casinos or working with junkets," the Bureau stated.
However, the British Journal of Criminology report suggests, this is not the case. The report went on to state that some casinos would seek out the most powerful triads as managers of VIP activities.
Millions Stolen from Gaming Junket Last Year
In September 2015, Bloomberg Business, Daiwa Capital Markets analysts, led by Jamie Soo, issued a report stating that millions of dollars were stolen by Dore Holdings, a junket working inside the Wynn Macau. Stock prices tumbled as the amount stolen was reported to be anywhere from HK$200 million ($25.8 million) to HK$2 billion ($258 million).
The impact brought the junkets back into the spotlight, as Dore Holdings was reported to operate at least 25 of the VIP tables at the casino, or more than five percent of the 461 total tables the casino operates, according to its latest filing.
*Image courtesy of The Times.