Lessons from the Junket Business in Atlantic City and in Macao

Abstract

Although junket operators can help casino operators secure business from premium patrons, there has been limited study of this topic in the academic literature. Recent junket business developments in Atlantic City (the most strictly regulated jurisdiction in the US), and in Macao (the world’s largest gambling market) have led to new insights and understandings of the junket business, and this paper identifies key lessons learned from these two major casino markets. The qualitative research interview was adopted due to the under-researched nature of the junket business. This study is based on the institutional theory to analyze human interactions and activities in terms of overt or implicit rules involved in the junket business. A review of the literature and interview findings indicates that junket operators may play a more important role with the economic slowdown, since their business is focused on bringing patrons from strong regional or national economies. This can be achieved by adopting certain location-specific strategies to match changes in the regional market. Diversified product offerings, rather than price reductions, are critical to entice premium patrons in the face of increasing casinos in nearby region. Despite the economic contribution of the junket business, some junket practices might be perceived as exploitative of patrons. Apart from the appropriate balance between the public policy to minimize social costs and an appropriate regulatory standard, a jurisdiction needs to consider such local contexts as its unique culture and junket operators’ intention to promote their interest, in order to better regulate the junket business.