Junket operators in Macau are facing intense competition because of narrowing profit margins in the VIP business, Simon Cheung, managing director of Asia Pacific Investment Research for Goldman Sachs (Asia) L.L.C., said Friday.
VIP tables used to earn six to eight times the mass-market tables five or six years ago but the number has gone down to three times because of the emergence of the premium mass market, Cheung told the Macau Gaming Summit.
He expects VIP and mass market revenue growth to be 12 percent and 24 percent, respectively, in the coming year due to China’s slowing economy, a strengthening yuan and inflation.
Macau’s junket operators lost 90 percent of their value during the 2008 global financial crisis amid stiffer competition and a murky revenue sharing arrangement, he said.
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