Macao isn't such a slam-dunk after all, according to the Wall Street Journal (no link; subscription req'd). Yesterday, reporters Tamara Audi and Bruce Stanley charted some of the financial narrows American operators have to navigate over there. Obviously, the tightest scrape is the "rake" taken by junket operators. Some take as much of 40% of the gambling revenue they bring in (leaving the casino operator with 21% after taxes).

This meant that Wynn Macau pulled in $444 million in VIP play in 1Q08 but was left with $88 million (hardly chump change, of course) once the junketeers and the government had gotten their share of the take. MGM Mirage tried another, more conservative formula, according to Audi and Stanley, but is now reworking its commission policy. The company has also conceded that it's underperforming in Macao, where its "fair share" (i.e., proportion) of the market would 9% but is running at 8%. In other words, it's getting only 88% of the play it ought to, were the action distributed proportionally to gaming positions.

Between a consolidation among the junket operators* that has left them wielding increased power and the fact that Peking takes its 39% of gambling revenue even on dishonored markers (forcing the casino to pony up money they don't have in hand), the WSJ finds that companies like Wynn Resorts, MGM and Las Vegas Sands are contending with market forces they didn't quite expect. (*--A-Max Holdings Ltd., Crown Macau's exclusive junketeer, folded eight junket operations into one late last year.)

Sheldon Adelson is rumored to be dangling a 45% revenue share before junket operators, shaving his margins even narrower. Steve Wynn says he's not going to raise his commission rate, so that's one guaranteed ally for Macau CEO Edmund Ho's commission freeze, which Adelson's emissary is loudly opposing. <