CASINO

Macau casinos fail second round of smoking tests; two Mocha Clubs closing

TAGs: Macau, Melco Crown Entertainment, mocha clubs, smoking ban

macau-casinos-mocha-clubsSixteen Macau casinos will have their smoking areas reduced after failing the Asian gaming hub’s second round of sniff-checks. On Jan. 1, Macau authorities required casinos to set up designated smoking areas inside their casinos, but 28 of Macau’s 46 casinos failed the first round of air quality tests published in April. Earlier this month, Secretary for Social Affairs and Culture Cheong U revealed that the number of smoking laggards had dropped to 16 in round two. Cheong vowed that offenders would have their smoking areas reduced until they could prove they were taking the edict seriously, but he declined to offer specifics as to how this process would be implemented.

Cheong similarly declined to offer specifics on which 16 casinos had failed inspection, but by coincidence, 16 of the original 28 offenders were operated by SJM Holdings. And shortly before Cheong made his announcement, SJM Holdings’ CEO Ambrose So had publicly suggested that since SJM’s older casinos were harder to retrofit, maybe SJM should be cut a break on the smoking issue. Is it possible that SJM has batted 1.000?

SJM may be in for some shrinkage, but so is Mocha Clubs, the slot parlor operation of Melco Crown Entertainment (MCE). Last November, Macau’s government announced new rules for gaming operations in residential neighborhoods, requiring slot parlors to be located in either a five-star hotel, a non-residential building within 500 meters of a casino or as part of a resort in an area that isn’t “densely populated.” The changes affected five slots halls; two operated by SJM and three by MCE. SJM closed its Treasure Hunt slots hall in May and now two MCE halls – the Mocha Hotel Taipa Best Western and the Mocha Lan Kwai Fong – will close their doors on Nov. 26, according to Portuguese-language Jornal Tribuna de Macau. During H1 2013, Mocha Clubs contributed $37.2m of MCE’s total $2.44b in revenue and $9.8m of MCE’s $603.6m in earnings, so the overall effect on MCE’s bottom line won’t be great.

MCE’s plan for the Mocha Marina Plaza is a little different and perhaps a little more controversial. When MCE released its H1 earnings in July, it announced it would be relocating the establishment from its current mixed commercial/residential location in Rua de Pequim in downtown Macau, but Macau Business Daily reported the new location is literally across the street. While the new location is a commercial/office property, Macau’s authorities might suggest MCE is observing the letter of the law while ignoring the law’s intent. Stay tuned…

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