On Thursday, Sterne Agee analyst David Bain reported that a junket that controlled VIP rooms at Wynn Macau had lost as much as HKD 2b to internal thievery. A Wynn spokesman subsequently told Bloomberg that the junket in question was Dore Entertainment Co Ltd.
Wynn shares closed out the day down 4.6% to $69.67 after dipping as low as $68.11 but Wynn spokesman Michael Weaver insisted that the heist would have “no direct financial impact on Wynn Macau. Dore owes no money to the company and continues to operate in Wynn Macau.”
UBS Securities Asia issued a note saying that a junket cage manager was suspected of having “absconded with investor capital.” UBS cautioned that the HKD 2b figure could turn out to be inflated. Daiwa Securities Group concurred, suggesting the total loss could be as low as HKD 200m, although even that figure would be “material and quite significant” for an already struggling junket industry.
Credit Suisse analysts also believe the HKD 2b figure may be exaggerated. While other analysts have suggested that the junket world’s already tight liquidity would take a further hit, Credit Suisse believes the impact was “likely to be small if any” because Dore’s boss had reportedly “agreed to honor the debt and the deposit put in by the junkets and the agents.”
Dore was among the first junkets to strike deals with Wynn Macau when the property opened in 2006. Dore also had a significant presence at Sands China’s Venetian Macao. In July 2014, Dore changed its name to Sino Credit Holdings Ltd and announced that it had disengaged from Macau’s junket industry in order to focus on its financial services business.
UBS believes the current Dore operations include two VIP rooms at Wynn Macau containing at least 25 tables, which could account for up to one-quarter of the property’s junket volume. Individuals connected with Dore are believed to have operations of unknown size at the SJM Holdings-licensed Lan Kwai Fong hotel.
Dore’s operations are believed to account for between 4% and 5% of Macau’s total VIP gambling turnover, a slice worth between HKD 9b to 13b (US $1.16b to $1.68b) per month.
The theft comes a little more than one year after the junket world was rocked by reports of a $1.3b heist from the Kimren Group. In that case, a shareholder named Huang Shan allegedly absconded with the sum, leaving the other Kimren shareholders in a lurch.
The past 18 months or so have not been kind to junkets, leading to a 30% decline in the number of functioning junkets since their 2013 peak. As many as 10 Macau VIP gaming rooms reportedly closed last month and on Wednesday, Las Vegas Sands president Rob Goldstein declared the junket model to be “broken – for now.” It remains to be seen how many junkets will still be standing by the time that model gets fixed.