Macau casino junket investor Iao Kun Group Holding Ltd (IKGH) is following through on its vow to further reduce the scope its Macau operations.
On Tuesday, IKGH announced that it had closed its VIP gaming rooms at Galaxy Entertainment Group’s Galaxy Macau and StarWorld properties. As a result, IKGH has also terminated its related deals with Sang Heng and Sang Lung Gaming Promotion Ltd.
The closures follow last week’s announcement that IKGH had closed its VIP room at Sands China’s Sands Cotai Central and terminated its deal with King’s Gaming Promotion Ltd. The three closures leave IKGH with just two Macau VIP rooms, one at Melco Crown Entertainment’s City of Dreams and the other at SJM Holdings’ L’Arc Macau.
IKGH said the latest two closures will generate total annual savings of around $4m. The closures came as a result of IKGH’s strategic review of its Macau operations, and IKGH warned that it could take “additional action to reduce its operating expenses and preserve its capital position.”
IKGH recently announced that its VIP gaming turnover in August totaled only $110m, a 75% year-on-year decline. That marks the 23rd straight month of falling turnover figures, mirroring the Macau market’s own run of bad luck, which finally ended in August after 26 consecutive months of revenue shortfalls.
Macau’s VIP market has borne the brunt of the market’s downturn, prompting many junket industry firms to turn their focus to other markets. IKGH has inked junket deals with Australian casino operator Crown Resorts and taken on the role of casino owner in South Korea following the June acquisition of the Jeju Sun Hotel & Casino.
The continuing exodus from Macau by minor junket players like IKGH will likely further strengthen the market’s big boys – SunCity, Neptune and Tak Chun – although even the once mighty Neptune is struggling to turn a profit these days.
