{"id":151572,"date":"2020-10-08T13:06:39","date_gmt":"2020-10-08T20:06:39","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=151572"},"modified":"2020-10-08T14:22:09","modified_gmt":"2020-10-08T21:22:09","slug":"macau-junkets-pinched-by-new-rules-but-goldman-says-its-not-all-bad","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/macau-junkets-pinched-by-new-rules-but-goldman-says-its-not-all-bad\/","title":{"rendered":"Macau Junket Cycle not Dealing with Structural Issues, Says Goldman Sachs"},"content":{"rendered":"

The current weakness in Macau’s junket industry is a more symptom of supply issues, not structural damage. Today’s cycle, though weak, isn’t as bad as the slump of 2014-15, according to Goldman Sachs analysts.<\/p>\n

\"Macau
Wynn Macau. China is crimping junket visits, but Goldman Sachs says the situation isn’t structurally bad. (Image: New York Daily News<\/em>)<\/figcaption><\/figure>\n

Gambling is illegal everywhere else in China. Junkets entice VIPs to visit the gaming enclave, but over the past several months, those players are yanking billions of dollars from accounts held at gaming properties, as Beijing cracks down on cross-border money transfers, citing national security risks.<\/p>\n

We do not believe the current cycle is as severe as the one in 2014-15, when the anti-graft campaigns by the Chinese government affected both gaming demand (i.e., removal of grey income) and supply (i.e., credit crunch in a fragmented, highly leveraged junket system),\u201d said a team of Goldman analysts in a recent client note.<\/p><\/blockquote>\n

Still, junkets are integral to Macau’s still slow-moving efforts<\/a> to rebound from the coronavirus pandemic. The sector accounted for half of the special administrative region’s (SAR) $36.5 billion in 2019 gross gaming revenue, according to Reuters data.<\/p>\n

Not Jumping for Junkets<\/h2>\n

The current state of affairs is tricky for Macau operators. As gamblers pull cash from junket accounts, those companies yank deposits from casino accounts. Some gaming companies are dealing with the situation by capping the number of cash chips junket firms can withdraw.<\/p>\n

\n

The six Macau concessionaires are Sands China, Wynn Macau, MGM China, Galaxy Entertainment, SJM Holdings, and Melco Resorts, but not all are equally levered to VIPs. For example, Sands and Galaxy control almost half the mass and premium mass market. Conversely, Melco, and Wynn<\/a> are more dependent on top-tier gamblers.<\/p>\n<\/div>\n

As the Goldman analysts point out, it’s all about ease of moving funds in the current environment.<\/p>\n

\u201cThis time around, the impact is mostly on the supply side, as greater difficulty in transferring money offshore by Chinese agents\/players will likely result in junkets turning more cautious on credit extensions, with some already contemplating diversifying and changing their business model,\u201d<\/strong> according to the bank.<\/p>\n

Dented Recovery<\/h2>\n

While analysts and industry observers widely expect Macau to rebound from the COVID-19 pandemic more rapidly than Las Vegas<\/a>, the recovery time line in the Asian gaming hub is growing longer.<\/p>\n

The Golden Week holiday wrapped up today, with visits falling nearly 87 percent year-over-year, meaning the highly anticipated fourth-quarter resurgence in GGR figures will likely be pushed out to 2021.<\/p>\n

Additionally, Macau is still hamstrung by travel issues. It’s taking a week to 10 days for tourist visas to be approved on the mainland, while Hong Kong still has a 14-day quarantine protocol in effect for travelers arriving from the gaming center.<\/strong><\/p>\n

As for junkets, Goldman believes the situation will steady, and high-end gamblers are merely waiting out Beijing’s clampdown on money transfers.<\/p>\n

\u201cAs far as demand is concerned, while certain players may hold off their gambling trips near-term until the situation stabilizes, in view of the crackdown [in China] of illegal gambling activities and the introduction of a \u2018banned player list\u2019, we do not see any structural issue and\/or substitutes for brick-and-mortar gambling in the medium term,\u201d said the bank.<\/p>\n","protected":false},"excerpt":{"rendered":"

The current weakness in Macau’s junket industry is a more symptom of supply issues, not structural damage. Today’s cycle, though weak, isn’t as bad as the slump of 2014-15, according to Goldman Sachs analysts. Gambling is illegal everywhere else in China. Junkets entice VIPs to visit the gaming enclave, but over the past several months, […]<\/p>\n","protected":false},"author":46,"featured_media":151576,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[69069,62],"tags":[],"acf":[],"yoast_head":"\nMacau Junkets Pinched by new Rules, But Goldman Says It's not all Bad<\/title>\n<meta name=\"description\" content=\"Macau junkets are feeling the heat of Beijing's crackdown on cross-border money transfer, but Goldman Sachs says things can improve.\" \/>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Macau Junkets Pinched by new Rules, But Goldman Says It's not all Bad\" \/>\n<meta property=\"og:description\" content=\"Macau junkets are feeling the heat of Beijing's crackdown on cross-border money transfer, but Goldman Sachs says things can improve.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/macau-junkets-pinched-by-new-rules-but-goldman-says-its-not-all-bad\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2020-10-08T20:06:39+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-10-08T21:22:09+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2020\/10\/macau4-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"801\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/macau-junkets-pinched-by-new-rules-but-goldman-says-its-not-all-bad\/\",\"url\":\"https:\/\/www.casino.org\/news\/macau-junkets-pinched-by-new-rules-but-goldman-says-its-not-all-bad\/\",\"name\":\"Macau Junkets Pinched by new Rules, But Goldman Says It's not all Bad\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-junkets-pinched-by-new-rules-but-goldman-says-its-not-all-bad\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-junkets-pinched-by-new-rules-but-goldman-says-its-not-all-bad\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2020\/10\/macau4-1.jpg\",\"datePublished\":\"2020-10-08T20:06:39+00:00\",\"dateModified\":\"2020-10-08T21:22:09+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Macau junkets are feeling the heat of Beijing's crackdown on cross-border money transfer, but Goldman Sachs says things can improve.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/macau-junkets-pinched-by-new-rules-but-goldman-says-its-not-all-bad\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/macau-junkets-pinched-by-new-rules-but-goldman-says-its-not-all-bad\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/macau-junkets-pinched-by-new-rules-but-goldman-says-its-not-all-bad\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2020\/10\/macau4-1.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2020\/10\/macau4-1.jpg\",\"width\":1200,\"height\":801,\"caption\":\"Wynn Macau. 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