Gold Moon to close room at Sands Cotai
One of the premier junket operators in Macau may exit the marketplace for good?another sign of a sharp decline in the world’s No. 1 gaming market.
Junket operator the David Group is in the process of shutting down three of its seven VIP rooms in Macau and consolidating operations in the rest. The company “will seek to shut down its VIP rooms in an orderly manner and in several phases over the next few months and will seek to collect all debts outstanding,” according to a January 15 note from Japanese financial house Nomura. The David Group itself said the three rooms will close by January 31.
David Group launched operations in Macau in 2004. Last year it closed VIP rooms in the Venetian Macao and City of Dreams, but continues to operate rooms at Wynn Macau, MGM Macau, Galaxy Macau and elsewhere, reported GGRAsia.
Nomura estimates that the junket operator’s market share is between 3 percent and 5 percent of total VIP rolls in Macau, “making it one of the top 10 junkets in Macau and representing approximately MOP200 billion (US$25 billion) to MOP300 billion in value terms.” Clients must put up HK$100,000 (US$13,000) to open an account.
Consolidating its business in fewer rooms will allow the David Group to expand overseas, the firm said in a statement. It will cease operations at Four Seasons, a property of Sands China Ltd., and at L’Arc, a casino operated by a third party under the gaming license of SJM Holdings Ltd,, as well as its room at the MGM property.
Another gaming promoter, the Gold Moon Group, recently confirmed to GGRAsia that it’s closing its VIP room at the Sands Cotai Central resort, which has hosted high rollers since 2012. Gold Moon’s Chiu Siu Fung said the firm’s business is “stable” and that the company is also looking to concentrate on overseas operations.
“As the business in Sands Cotai Central has not been doing really well, we thought why don’t we close down and further develop the overseas market like the Philippines, Vietnam and Australia?” Chiu said. “We have already been doing this and bringing guests (to those markets) for about a year.” Gold Moon also has VIP rooms at Altira; Galaxy Macau; Wynn Macau; and Pharaoh’s Palace Casino at the Landmark Hotel.
Chiu added that the company is looking to expand its business model beyond gaming junkets. “As the central government wants Macau to diversify its economy from gaming, we have also been doing so. We have a food souvenir business in Hong Kong which is quite popular; we have seafood restaurants, and we will soon open a tourism agency in Macau as well.”
Frank Ng, director of corporate communications for the David Group, told Bloomberg News the company is “adjusting our business strategy; this is a general trend in the industry. We’re hibernating. Once we wake up, we can restart.” The company can reopen the rooms if and when the market conditions improve, he added.
Meanwhile, in the first quarter of 2015, the David Group will open VIP rooms in Manila, the Philippines; Da Nang, Vietnam; and Jeju, South Korea, the company announced. It also has plans to expand to Europe.
Junket operators arrange trips, plan accommodations and establish credit lines for high-rolling gamblers. These elite players accounted for more than 60 percent of Macau’s MOP351.52 billion (US $44 billion) casino revenue last year. But the government crackdown on gaming in Macau has created “a New Normal,” according to the South China Morning Post. In an article, the publication said the Chinese government “knocked down Macau’s house of cards in just six weeks.”
“They say that when it comes to casinos, the house always wins,” the publication reported. “But as Macau’s gaming behemoths digest the incredible events of the past six weeks, they must be thinking that whoever coined the phrase never played against the Communist Party.
Jason Wright of U.S.-based risk consultancy Kroll, told Bloomberg the Macau environment “is becoming more difficult for various reasons, most obviously because the Chinese corruption investigations have dissuaded some from high-stakes gambling.”
Meanwhile, Forbes reports that President Xi Jinping’s anti-corruption campaign is “popular at home,” in Mainland China.
