Macau casino junket operator Iao Kun Group Holdings Ltd (IKGH) says its VIP gambling business declined by more than three-fifths in 2015.
IKGH, which has a VIP gambling presence in five Macau casinos, reported rolling chip turnover of $420m in December, a 40% year-on-year decline from the $710m the company reported rolling in December 2014. On the plus side, win rate was 3.28%, well above the 2.7% to 3% theoretical win range.
For the year as a whole, IKGH fared even worse. While the overall Macau market fell 34.3% in 2015, the VIP market was hit much harder (final VIP-mass share stats won’t be published until later this month). As a result, IKGH reported its 2015 turnover falling 61% to $6.42b, for a monthly average of $540m.
Like the overall Macau market, this is the second straight year IKGH has suffered an annual decline. In 2014, IKGH reported turnover falling 3% to $16.6b, about on par with the Macau market’s 2.6% decline that year.
Like many struggling junkets, IKGH is trying to diversify its geographical profile. The company struck a deal last April with Australian casino operator Crown Resorts to steer VIP gamblers to Crown’s casinos in Melbourne and Perth. The company says it is engaging in “trial operations” at these properties to gain “a greater understanding of the preferences of its junket agents and VIP players and the logistics of the market.”
Among the Macau casinos at which IKGH has a presence is L’Arc Macau, which was the latest casino to report an internal theft by a senior junket staff member. IKGH has yet to comment on the theft but local broadcaster MASTV reported that at least 10 VIP rooms at L’Arc had been affected by the embezzlement, the third major incident of its kind in recent years.
The past two years have not been kind to junket operators and worse may be to come. On Tuesday, Deutsche Bank analyst Karen Tang issued a note saying she expects “more small junkets will go out of business after Chinese New Year [Feb. 8] and even bigger junkets may face redemption pressures” if Macau authorities press ahead with plans to implement tighter financial control over its licensed junket operators.
