CASINO

Macau junkets taking deadbeat VIPs to court amid fears VIP biz will never recover

TAGs: junket operators, Macau

macau-junkets-court-vipMacau casino operators are increasingly fearful that the once white-hot VIP gaming sector will never regain its former glories.

Macau casino gaming revenue fell for the 15th straight month in August and, while numbers are down across the board during this span, the VIP sector has suffered the most. A note issued this week by Wells Fargo analysts has reinforced growing pessimism that a ‘V-shaped’ rebound may not be in Macau’s cards.

Wells Fargo said mass market gaming trends were ‘stable’ even though prior projections of modest growth have yet to materialize and “visibility into 2016 appears to be limited.” Mass market gaming revenue was down 30.3% in August, slightly better than the overall market’s 35.5% decline.

The VIP sector fared far worse, with turnover down 54%, a worse result than the 51% decline reported in July. Fortunately, an above average hold rate held August’s VIP revenue decline to a mere 40.4%.

Regardless, Wells Fargo said conversations with some casino operators had revealed a growing consensus that “VIP play in Macau may never fully come back, citing a liquidity crunch and tighter policy toward Macau” from the authorities in Beijing.

JUNKETS GO TO COURT
As further evidence of the unreliability of the VIP sector, Macau’s Court of First Instance has seen a spike in the number of lawsuits filed by junket operators against gamblers who can’t repay their debts. The Court reopened on Sept. 1 following a month’s recess and has since received a flood of new junket lawsuit filings.

Macau Business Daily reported that among those seeking judicial redress are major names like SunCity Group and Tak Chun Group, as well as Sands China’s Venetian Macau casino. The filings bring the number of junket cases filed so far this year to 58. The Court has received 151 such filings in the past 20 months, compared to just 113 cases in the previous six years combined.

The filings are consistent with a University of Macau criminologist who recently speculated that the declining VIP sector meant junket operators were now “lending money to people who they know probably won’t be able to pay it back.” But with no one else asking for credit to gamble, what’s a junket to do?

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