Casino premium market: The great post-2022 transformation (Ryan HO)

 Dez25

The gaming regulatory framework introduced after 2022 has accelerated a shift away from the traditional VIP junket model towards the Premium Mass and Premium Direct segments, a recent academic dissertation shows

This is the main conclusion of a doctoral thesis recently defended by Ryan Ho Hong Wai at the Faculty of Business and Law of the University of Saint Joseph.

Ryan Ho titled his thesis “Investigating the Premium market in Macau casinos: regulation, practice and challenges”.

With the implementation of the new regulatory system — aimed, among other objectives, at reducing Macau’s financial and political reliance on the highly volatile, opaque and junket-controlled VIP segment — casino operators were compelled to adjust their business strategies towards the Premium Mass and Premium Direct markets.

“There has been a trend among concessionaires towards premiumizing the gaming market by offering loyalty programs and personalized services for their premium direct and premium mass segments,” the thesis notes.

Described by the author as “Market Premiumization”, this new model is shown to be both higher-margin and more transparent.

“The new gaming laws have both positive and negative regulatory impacts on the premium gaming operations in casinos. In particular, the new regulatory system has led to the growth of the premium direct and premium mass segments,” Ryan Ho states.

“The premiumization of the gaming market has also facilitated direct relationships between concessionaires and premium players, enabling the provision and management of premium services in casinos,” the new doctorate highlights.

Differences between Premium Direct and Premium Mass segments

Based on findings from casino participants involved in the study, the author distinguishes between the Premium Direct (PD) and Premium Mass (PM) segments in Macau casinos primarily in terms of incentive structures, chip types, player hosting and privacy arrangements, and overall market positioning.

At the incentive level, for instance, PD operates as a commission-based, in-house programme, offering turnover commissions tied to a player’s gaming volume. In contrast, PM players receive complimentary incentives — or “comps” — such as free hotel stays, food and beverages, gifts (such as iPhones), and other product rewards, resembling the traditional model used by US and other international casinos.

Another key difference lies in chip usage: PD players predominantly gamble using dead chips (non-negotiable chips), whereas PM players mainly use cash chips.

Differences are also evident in terms of access and privacy. PD access typically ensures greater privacy and requires higher buy-ins, with gaming areas often located on dedicated floors accessible via private elevators and featuring clearly segregated gaming spaces and private lounges (VIP areas). PM, by contrast, is more accessible to a wider customer base, includes players with comparatively lower betting limits, and is generally located in designated high-limit areas on the main gaming floor, sometimes with separate salons.

In essence, PD functions as an in-house replacement for the traditional VIP model, focusing on commission-based play using dead chips within private VIP salons for top-tier high rollers. PM, on the other hand, targets a broader spectrum of high-limit cash players, rewarding them with traditional complimentary services in premium areas often integrated into the main gaming floor.

But does this mean that PD is simply junket-based VIP gaming under a different name?

Ryan Ho identifies several similarities: both target the highest-value, high-roller customers engaging in large-volume betting; both rely on incentive mechanisms based on rolling or dead chips and commission systems linked to turnover; and both operate in private or semi-secluded gaming environments designed to ensure exclusivity and discretion.

However, the author points to a crucial distinction: the removal of third-party intermediaries — namely junket operators — as a result of regulatory reforms.

“The enactment of new gaming laws has brought an end to the third-party-managed VIP rooms. The new gaming regulatory system has particularly resulted in a decline in the prominence and influence of gaming promoters in casinos. VIP gaming has progressively been shifting towards an in-house premium direct model,” the thesis states.

In this new structure, operations are managed entirely in-house. Casino operators themselves oversee customer relationships, extend credit where permitted, and assume both financial and regulatory risks directly.

“Criminal Fragmentation”

What Ryan Ho describes as “Market Premiumization” is just one of four major regulatory impacts identified in his research.

The first is “Industry Regulation”, which examines stricter rules and enhanced government oversight. The second is “Product Diversification”, with a focus on non-gaming development in line with government directives to attract a broader range of tourists and strengthen international competitiveness.

The third is the emergence of “Criminal Fragmentation”, a phenomenon whereby regulatory tightening has led to the dispersal or fragmentation of illicit activities previously associated with the old VIP and junket system.

The study also identifies seven core categories illustrating the practical impact of the new regulatory environment on casino operations. These include increased difficulties in acquiring premium players from Mainland China and other regions, as well as the continued — albeit reduced — presence of unauthorised intermediaries within casinos.

“Despite these positive industry developments, there are regulatory concerns under the new gaming laws,” Ryan Ho acknowledges.

“The restrictions on gaming promoters and their credit services might inadvertently fragment the casino ecosystem and accelerate the prevalence of unauthorized agents engaging in illegal lending, money exchange, and other gaming-motivated crimes within casinos. Furthermore, Chinese policy considerations have substantial implications for industry groups in Macau and other gaming jurisdictions,” he notes.

“These findings also emphasize the need for concessionaires and other industry stakeholders to adapt and adjust to new regulatory changes due to the enhanced regulatory oversight, changing market dynamics, economic and competitive challenges, and the evolving role of gaming promoters,” the author concludes.

https://macaubusiness.com/casino-premium-market-the-great-post-2022-transformation