Macau has made a move to help its industry continue to draw in VIP players. Government officials have agreed to put a ceiling on the commissions paid to promoters. Recently a new generation of promoters have been commanding rising commissions to funnel VIP clients to the one place in China where gambling is legal. Wynn Resorts Ltd (of the US), Galaxy Entertainment Group Ltd (Chinese operator in Macau), and Sociedade de Jogos de Macau SA (owned by the legendary Stanley Ho) all support the ceiling. While Macau casinos pulled in 37.1 million in profit in the first three months of 2008 (more than Las Vegas and Atlantic Citycombined) there are concerns that increasing commissions could squeeze out profit margins. The casinos are understandably a large source of employment for area, which is an hour boat ride from Hong Kong.
Major promoters are called junket operators in Macau. They currently earn up to 1.35% of the wagers they generate for the casino. The new cap would limit this to 1.25%. The new law will take effect in August and violators will face fines which have not been specified as of yet. The step is seen as necessary to try and stabilize the gambling industry in Macau and includes no new licenses and a limit on the number of gaming tables. VIP clients currently contribute 70% of the profits. Unlike in the US casinos do not have direct relationships with their high rollers and rely solely on junket operators to bring them in.
Some doubts as to how well this new law can be policed have been raised and it is thought they may just change the amount lended to junket operators along with easier terms, but this will remain to be seen. It is in the least a step in the right direction and shows some concern for the country’s peoples and not just profits.