Macau regulator bans junket operators from offering credit; Wynn and Melco would close VIP rooms

Macau’s gaming regulator has issued an instruction to junket operators to stop offering credit to their customers and requesting that chip purchases can only be done for upfront cash. The order from Macau's Gaming Inspection and Coordination Bureau (DICJ) would effectively bar all junkets from providing loan services to VIP gamblers.

The notice comes following a Bloomberg report that Wynn Resorts and Melco Resorts would close their junket rooms by December 20 and December 21, respectively.

‘Some (if not all) other casino operators may also follow Wynn’s move with respect to the junket room operations,’ stated a note published by Sanford C. Bernstein.

Wynn’s decision comes as scrutiny of local junket operators' businesses tightens and after the head of Suncity Group Alvin Chau Cheok Wa was detained by Macau police over alleged links to cross-border gambling.

Authorities in mainland China, where gambling is illegal, see junkets as responsible for helping to siphon billions of yuan overseas, a risk to a country that has always had strict controls on capital outflows.

Carlos Lobo, a Macau-based gaming consultant, said if the Macau government did make junkets stop offering credit to clients, it would mark the end of an era.

"If this is true, the junkets will have to operate as a travel agency, through activities such as receiving fees for bringing rich clients to casino operators, rather than receiving commissions from VIP gaming rooms which have been the main business model for years," he stated, as reported by Reuters.