Junkets collecting pennies on the dollar
Macau’s Gaming Inspection and Coordination Bureau did not renew the licenses of 35 junket operators in December because they did not submit new information as required by the regulator.
“In October, we issued new accounting guidelines for gaming promoters” due by the end of 2015, said Paulo Martins Chan, newly appointed director of the DICJ, in an interview with Radio Macau.
According to GGRAsia, there were 182 licensed junkets in Macau last summer.
In one analyst’s view, the junkets may have allowed their licenses to expire due to the weak demand among VIPs, which has decimated the junket sector in the territory.
“We suspect most (if not all) of these 35 junkets were probably on their way out the door anyway,” wrote Grant Govertsen of Union Gaming Securities Asia. “This is in line with our view that the junket industry will continue to see further closures and consolidation, and also in line with our current forecast for VIP gross gaming revenue to decline 12 percent in 2016.”
The stricter accounting rules came on the heels of an alleged multimillion-dollar theft by a cage cashier at a Dore Entertainment VIP room at Wynn Macau last September. A new alleged fraud case at L’Arc Macau, an SJM satellite casino, involved funds totaling HKD99.7 million (US$12.9 million). The revised guidelines require junkets to submit regular detailed accounting reports and identify, in detail, all key financial personnel.
Sanford C. Bernstein analysts said the new case “may accelerate the government’s plans to potentially introduce greater junket regulation. Such new regulations would create headwinds in junket VIP and may further limit junkets’ ability to raise capital and conduct operations in the manner to which they are accustomed,” said the Sanford Bernstein team.
Kwok Chi Chung, president of the Macau Junket Operators Association, told Bloomberg News last month that Macau junkets are collecting only 20 percent to 30 percent of their debts, in stark contrast to 2013, when 70 percent of loans were quickly repaid.
Because gaming debts are not legally collectable in Mainland China, “This is one of the reasons why we are trying to expand the mass market segment,” said Chan.
Meanwhile, the first junket-run VIP slot room in Macau has debuted at Jimei Casino with 130 high-limit slot machines. Govertsen said the new slot parlor “could be indicative of a segment of the industry that is very much in need of revenue and willing to try an idea that in a different era would likely not have been considered.”
