(Last updated: February 1, 2020)
Most casinos in Macau have VIP rooms that cater to high rollers who routinely bet upwards of $10,000 HKD per hand. Almost exclusively mainland gamblers, they are usually aligned with a junket operator who lends them money when they are in Macau, and collects and settles all debts when the player returns to China.
In exchange for their business, these high rollers are rewarded with a cash back rebate, usually between 1.1% and 1.25% of their total buy in. The player will then gamble using promotional chips, also called “dead chips”, which cannot be exchanged for cash and can only be used to gamble. If the player wins a bet, he is paid in normal cash chips. If he loses a bet, he loses the dead chip. Once the player is out of dead chips he can exchange the normal cash chips he has accumulated for more dead chips, or he can simply cash them in.
These promotional chip programs are very good for the player, and I would definitely advise you to join one if you can if you can afford the high buy ins, which usually start from $50,000 HKD. The only game you’ll be able to play is Baccarat, and the chart below shows the adjusted house edge for the Banker and Player bet, after taking the cash back rebate into account.
In addition to private junket operators, every major casino will usually offer their own Promotional Chip program, albeit at a far lower commission, usually under 1%. (For a list of casino operators and their rates, please click here: VIP Rates.)
Junkets, on the other hand, routinely give over 1.1%, the rub being that they are far less reliable than casinos when it comes time to settle the commission. Unless you have personal connections within a junket and/or know the right people, I would probably just play it safe and do business with the casinos first.
I’d like to go into a little more detail now about the junket operators and how they work.
Junket operators strike deals with casinos to promote VIP rooms, and typically commit themselves to a minimum amount of rolling chip purchases a month, set by the casino. A casino usually partners with several different junket operators to supply gamblers for different VIP rooms, with all the junket operators in competition with each other. It’s important to remember that the junket operator only supplies the players. All the gaming is overseen by the casino, which provides the dealers and gaming manager.
The junket operators make money in two ways. They either take a fixed commission, an agreed percentage of rolling chip turnover, capped at 1.25 percent, or they accept an agreed percentage of the winnings in the VIP gaming room, which means they’re also on the hook for the same percentage of losses should the VIP room lose money.
Xi Jin Ping’s well publicized crackdown on corruption in 2015 and 2016 sent shockwaves through the VIP industry, spelling the end for many smaller and mid range junkets. Official data shows there were only 95 licensed VIP companies in Macau as of January 2020, a far cry from the 235 that were in operation in January 2013, when the industry was at its peak.
VIP revenues also hit their high water mark in 2013, when earnings reached 29.87 billion dollars, which accounted for just over 64% of all gambling revenues city wide. To put that outrageous number into perspective, total revenues from VIP and mass market combined failed to reach 30 billion dollars in both 2015 and 2016.
In 2019, VIP continued to take more and more of a backseat to mass gaming, representing only 46.3% of total gaming revenue. Analysts are predicting a further contraction in 2020, which is exactly how it’s been trending for 7 years now. In fact, I’d be surprised if VIP revenues stay north of 40% in 2020. Without a doubt, premium mass is here to stay, my friends.
For more information on VIP rates, please follow the link below.