Dore made headlines around the world last month after word spread that a Dore cage manager had made off with a significant amount of investor cash. Original reports put the total sum stolen as high as HKD 2b (US $258m), while Dore claimed the actual amount was only HKD 100m, although subsequent reports have pegged the figure closer to HKD 700m.
Regardless, the scandal prompted Dore to reconsider the scope of its junket operations in Macau. Over the weekend, Macau media reported that Dore had decided to shutter two of its three VIP rooms at the Wynn Resorts property by the end of October. On Monday, GGRAsia reported that Wynn Macau had confirmed that Dore would be shutting a single VIP room “in accordance with Dore’s plan to scale down their business operations.”
The Dore scandal panicked many junket investors into withdrawing their funds, putting further pressure on an industry already suffering a liquidity crunch. Last week, Macau’s government imposed stricter accounting rules on junket operators in a bid to improve transparency of a notoriously opaque sector.
The South China Morning Post had reported that Macau’s government intended to impose a ‘code of ethics’ on the sector, but Kwok Chi Chung, president of the Association of Gaming and Entertainment Promoters of Macau, told Macau Business Daily that he “had no information” regarding this alleged code.
Macau’s junket industry had already undergone significant retrenchment since the gambling hub’s revenue decline began and analysts expect the trend to continue. Daiwa Securities issued a note saying the new accounting rules would be “incrementally negative” for the sector and would likely lead to “renewed and accelerating junket attrition in the coming months.”
Macau is expected to report its 17th straight month of revenue decline once October’s numbers are officially tallied. Hopes that the Golden Week holiday period would help arrest the decline have proven hollow. Sanford C Bernstein Ltd issued note saying average daily revenue in the week ending Oct. 18 was “the lowest level seen since June 2010.”
Last week, Wells Fargo said the traditional month-on-month growth that Golden Week has produced in the past was “slightly lower than normal” this year, causing the analysts to revise their earlier predictions downward. Hopes are high that Melco Crown Entertainment’s new Studio City resort will provide a badly needed bump when it opens on Oct. 27 but no one expects it will be enough to reverse Macau’s short-term problems.