Response to revenue drop
Australia-listed casino operator Donaco International Ltd. has added six new junket operators managing 83 VIP tables at its flagship Star Vegas property in Poipet, Cambodia. The move to boost the junket business came as Donaco announced a 25.6 percent drop in revenues for the second half of 2017.
According to CDC Gaming Reports, in the six months leading to December 31, group revenue declined to AU$43.9 million (US$34 million). The change was attributed to sluggish VIP turnover at Star Vegas last year; in response, Donaco hired international casino marketing agency Vivo Tower Ltd. to draw more junket operators.
The results were also attributed to Donaco’s former Thai partner, which breached a non-compete agreement by operating an unauthorized casino at neighboring Star Paradise and another near a local supermarket. In a recent filing to the Australian Securities Exchange, Donaco disclosed it would incur an impairment charge on its Star Vegas license of about AU$144 million (US114 million), reported Inside Asian Gaming.
“The impairment is a direct result of the breaches of agreement by the Thai vendor, Mr. Somboon Sukcharoenkraisri, and his two sons, ‘Ham’ Techatut Sukcharoenkraisri and ‘Qoo’ Bhuvasith Chaiarunrojh,” said a statement from Donaco. “The company has commenced litigation against Mr. Sukcharoenkraisri and his sons over their breaches of their agreements, which specifically relate to the operation of competing casino and gaming businesses in the Poipet area.”
Donaco has entered into arbitration proceedings in Singapore, claiming damages of US$120 million.
Despite the decline, Donaco CEO Joey Lim says Donaco is trending for a comeback thanks to the new junkets. “Our VIP turnover increased tenfold from the low point in July to THB6.2 billion (US$197 million) in October, before dipping to THB3 billion in November and December. It has now begun to grow again, reaching more than THB8 billion in February to date.
“In addition, a second main hall has opened targeting non-Thai players with 16 tables currently, which will increase to 48 tables when in full operation. The tables in this hall include Macau-style ‘no commission’ baccarat, which is popular with the non-Thai players. We are working with tour agents to bring in mass market players from Bangkok and Siem Reap,” he added.
Lim said Vivo Tower has helped Star Vegas “fully utilize available space at the property.” For the privilege, Vivo will also pay a minimum fee of US$3 million per year. “We are confident that this relationship will add significant value to our operations,” Lim said.
