Understanding the Macau Casino Junket System & Why Its on a Losing Streak (WSJ)

There is a must read and lengthy Wall Street Journal article about the troubled Macau casino junket system with the article being accompanied by this short video segment where Kate O’Keeffe explains how the junkets have helped Macau casinos, but now that relationship is being tested:

Basically, casino junket operators act like shadow bankers – which ties into the following three problems or issues they and Macau casinos are grappling with:

  1. Some Macau casinos are wondering if they are better off without their expensive junket partners as those gamblers who go on their own are four times more profitable for the house. HOWEVER, junket operators also act as the best defense against bad debts.
  2. The US Department of Treasury is putting pressure on casino operators to do more about money laundering. This is causing friction between American casino operators and their Chinese partners.
  3. Junket operators and Macau casinos alike are being impacted by China’s corruption crackdown.

To read the whole article, Junkets That Fuel Macau Casinos Are on a Losing Streak, go to the website of the Wall Street Journal. In addition, check out our list of Macau ADRs that are involved in Macau casino gaming.

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