CASINO

Macau junket operator herd continues to thin

TAGs: junket operators, Macau, Neptune Group, Paulo Martins Chan

macau-junket-operator-thinning-herdThe ranks of Macau’s casino junket operators continue to shrink despite recent signs of life in the VIP gambling market.

On Friday, Macao Daily News quoted Gaming Inspection and Coordination Bureau (DICJ) director Paulo Martins Chan saying the DICJ planned to authorize “slightly more than 120” VIP gaming promoter licenses in 2017. That would represent a double-digit decline from the 141 valid licenses the DICJ confirmed in January 2016.

Chan said the year-on-year decline was partly the result of some junket operators failing to meet the DICJ’s standards for financial accounting. The DICJ imposed tighter accounting and auditing requirements in 2015 following a series of high-profile internal theft incidents that shattered junket investor confidence.

Chan told the Chinese-language media outlet that the DICJ would conduct a fresh inspection of junket operators following the Chinese New Year celebrations. These inspections would include financial soundness tests and audits of the total value of non-rolling chips the promoters were holding on behalf of clients.

Chan also said the DICJ was in the process of revising the rules that determine eligibility for a VIP promoter license, including the question of whether such licenses should continue to be issued to individuals or just to companies.

The new rules could also call for a “considerable increase” in capital requirements for any new junket operator. Since 2014, the minimum required deposit for a new junket operator has been MOP 100k (US $12,500) but the local junket industry association has pushed for this sum to be raised to MOP 10m ($1.25m).

Macau’s gambling market began to show signs of life late in 2016, posting five straight months of year-on-year monthly revenue gains after two years of declines. In Q4, the struggling VIP market – which had been the cause of most of Macau’s long decline – posted its first year-on-year gains since Q1 2014.

In the meantime, even high-profile junkets continue to struggle. The once mighty Neptune Group, which recently confirmed its second straight year of eight-figure net losses, announced last week that it was parting ways with both its chief financial officer and its outside auditors.

The company said Crowe Horwath HK had resigned as Neptune’s auditors due to its inability to come to terms with Neptune regarding audit fees for the coming financial year. Neptune also bid goodbye to CFO and board member Chan Shiu Kwong Stephen, who will step down at the end of January, all the while insisting he has “no disagreement” with the company. Chan’s CFO job will be filled by accounting veteran Lam Yick Man.

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