Tour firms hold aces as Vegas players vie for Macau

By Joseph Chaney and Tom Miles

HONG KONG/MACAU (Reuters) - U.S. casino owners have placed big bets on Macau, turning the Chinese enclave into the world's top gaming centre, but local junket operators are forcing big names from Las Vegas to pay top dollar to bring crucial high-roller clients to their tables.

U.S. firms such as Las Vegas Sands, which owns the massive Venetian Macau, have ridden Macau's boom to counter slowing business back home. But a shock quarterly loss at Sands exposed a truism: size isn't everything.

"What happened with the Venetian was they tried to maintain a low commission rate because they thought the quality of the property would attract VIP customers," said Macquarie gaming analyst Gary Pinge. "However, they underestimated the influence junket operators can have over the VIP players and hence they ended up raising their commission rates."

Junket operators -- tour firms that bring in high-rollers who gamble upward of $100,000 a visit -- are the gatekeepers who can decide where VIPs open their wallets.

Sands' woes highlight how aggressive local firms such as Golden Resorts Group and Neptune Group are squeezing casino margins by demanding higher fees for their services.

Casinos are dependent on junkets, which bankroll mainly Chinese VIP gamblers in return for a fee from the casinos, because of their longstanding relationships with high-rollers, or "whales".

Restrictions on China's yuan also work in favour of junket operators. Travellers can take only 20,000 yuan ($2,861) out of China on each trip so need help arranging funds to bet about HK$1 million ($128,200) per visit to qualify as a VIP.

Analysts say that unlike in Vegas, it is this VIP segment, not the mass market, that is driving Macau's growth and will account for roughly 60 percent of gaming revenues this year.