Providing a further business incentive

With Macau struggling to attract VIP gamblers like it once did, casinos such as the Wynn Macau are giving junket operators a raise to provide a further business incentive. The commission paid out by Wynn property has gone up for the first time in 14 years.

commission rate paid by the Wynn Macau to junkets rose from 40% to 42.5%

Starting March 1, the casino’s commission rate for junkets rose from 40% to 42.5%. This places the Wynn Macau on a par with other major casinos on the island, with competition growing stronger in a shrinking junket market. 

Something had to be done

Wynn Macau’s junket figures have been dropping consistently, meaning something had to be done. In the first quarter of 2019, the rolling share was 23%, dropping to 20% by the end of the year. It went down further to 16% since the start of 2020. According to Credit Suisse analysts,

As volume shrinks, junkets will naturally allocate business to operators offering higher commission.”

Both the junkets and market analysts for the Macau market were surprised by the Wynn Macau’s sudden decision to raise its commission rate. The casino facility has long had a preference for offering a better product rather than focusing on pricing. 

A turbulent time for Wynn and Macau

The Wynn Macau has been experiencing a drop in VIP traffic to its facility in recent times. The increase in junket operators’ commission is an attempt to recover from the business downturn resulting from the coronavirus.

It will be a tough task, particularly as Macau as a whole has been dealing with the outbreak. Casinos were shut down for 15 days in February to try and contain the COVID-19 virus.

The increased commission could also lead to slimmer margins for the Wynn Macau casino in the near future. Its current margin from junket VIP activity is about 13%. With the raise, this will likely drop down to 10%. On the other hand, the revised rate could incentivize junkets to drive more VIP traffic, increasing overall revenue.