“Macau revenues are four times bigger than Vegas because junket industry”

AERL is among 190 so-called "junket operators" in Macau, the world's largest gambling market with revenues quadruple that of Las Vegas, its neon-lit American rival. Macau's gambling revenues for January-May reached US$13 billion compared with US$10 billion earned in Las Vegas for the whole of 2010.

The city's junket operators act as middlemen to attract wealthy mainland Chinese gamblers to the former Portuguese colony, providing them with credit to circumvent China's opaque foreign currency controls.

Macau casino operators, including Steve Wynn's Wynn Macau and MGM Resorts' MGM China, are highly reliant on junket operators because they bring in about 70 percent of the glitzy enclave's total gambling revenue.

"Why are Macau revenues four times bigger than Vegas? It's because of the junket industry. Without us it would not be the same," Lam said, speaking to Reuters in Galaxy Entertainment's new US$ 2 billion casino, where AERL runs a VIP room.

Some junket operators have in the past been linked to China's notorious triad criminal gangs and some have murky dealings when it comes to collecting debts from customers. A lack of transparency is common in the industry, with most firms keeping a low profile.

A Reuters report in March revealed concerns that Macau is becoming vulnerable to money laundering and terrorist financing activities and the enclave's triad network appears to be expanding.

AERL, with a market cap of $145 million, says it is one of the first junket operators trying to explain how the junket business works, aiming to shake off the industry's dodgy reputation.

"A lot of people don't understand the industry, so we listed to show people what kind of company we are. As a listed firm, everything is clear and transparent," said the company's chief executive, Leong Siak Hung.

Macau, formerly a hotbed for piracy and corruption on the tip of China's southern coast, is the only place mainlanders are allowed to legally gamble in casinos. The government is trying to transform the enclave into an international tourist destination and shift away from over-reliance on junket gamblers.

An hour away from Hong Kong by ferry, Macau has transformed itself in recent years with the arrival of Las Vegas casino moguls setting up swanky multi-billion properties, Michelin-starred restaurants and luxury shopping malls, all to cater to the dominant Chinese customer.

AERL's share price has been under pressure due to concerns over flawed accounting standards of U.S. listed Chinese firms, said Lam, a former junket agent. But he shrugged off concerns that it would impact long-term investor sentiment.

"Our balance sheet is real, our figures can be verified from casino owners," he said, adding that the figures were also submitted to Macau's Gaming Inspection Bureau. "We are real and when the figures are real there can't be any problem in the end."

Industry analysts say that despite calls for Macau to focus on the broader mass market through the construction of new leisure and entertainment facilities designed to attract the Chinese holiday maker, junket gambling is here to stay.

"Junket operators have been around for decades and they are an essential part of the Macau gaming landscape. This is being increasingly recognised by the corporatisation of these businesses," said Macau-based Andrew Scott, CEO of World Gaming Magazine.

Wealthy Chinese gamblers are set to keep flooding Macau's fluorescent lit main peninsula and the developing Cotai strip, provided the Chinese government does not tighten visa restrictions as it has before, say analysts. Goldman Sachs predicts Macau's market is likely to reach US$ 50 billion within the next three years.

Concerns that China's moves to tighten domestic liquidity will impact credit availability for the VIP sector are overdone, analysts say.

Even as China raises the required reserves for its banks, Macau will still able to maintain double-digit growth, according to Leong, the chief executive of AERL.

"VIP customers still have ample assets," Leong said. "It is still affordable for them to gamble. Chinese consumers are becoming richer and richer."