In an effort to scale back cut-throat competition for high rollers, the Macau government said yesterday that it would mandate an across-the-board cap on the commission rates paid by casino operators to VIP junket agents as early as next month.
The announcement by Secretary for Economy and Finance Francis Tam Pak-yuen is likely to provide casinos with a relief from shrinking profit margins. It came after a second meeting in as many months between the government and representatives from each of the city's six licensed gaming operators.
'After months of communication with the industry we decided during the meeting to use administrative orders to regulate commission levels,' Mr Tam said. 'If any casino company disobeys the regulation, it will constitute a violation of the administrative order.'
Violators would be fined and breaches made public, he said.
Mr Tam and sources familiar with the talks at yesterday's meeting said the government would cap junket commissions at 1.25 per cent of VIP chip sales, inclusive of 'comp allowances' for room, entertainment and food and beverage expenses incurred by junkets on behalf of customers.
The cap represents a 16 per cent decrease from the up to 1.5 per cent now being paid by casinos in Macau to VIP junkets - the middlemen who bring in players, issue them credit for gambling and collect their debts.
Alternatively, the sources said, casinos that compensated junkets using a revenue-sharing model would be limited to offering a maximum 40 per cent of winnings to their junket partners, plus a comp allowance equal to 0.l per cent of VIP chip sales.