Macau's house of cards topples as investors lose big on junkets

China Star Entertainment

24/11/2015 21:00

* Number of junket operators down almost 50 pct 
    * Casinos' share of revenue from junkets plummets 
    * Angry investors focus on alleged triad boss 
    * Junkets' demise clears path for mass market 
 
    By Farah Master 
    MACAU, Nov 25 (Reuters) - The theft of millions of dollars 
from investors in a Macau junket operator has sparked months of 
protests and hastened the demise of a business model that 
greased the wheels of the $44 billion global gambling hub for 
over a decade. 
    Brandishing banners and loudspeakers, dozens of investors 
have protested outside Wynn Macau Ltd's  1128.HK  casino for two 
months, demanding the return of money stolen by an employee of 
junket operator Dore Entertainment Co Ltd and accusing Dore's 
head of dodging responsibility. 
    The crime has left the junket industry's reputation in 
tatters and sped up the Chinese territory's shift away from VIP 
gamblers - who used to account for more than 80 percent of its 
gaming revenues - to the mass-market segment of less wealthy 
Chinese tourists. 
    "We do see stabilisation in mass, unlike in VIP where it 
continues to drop like a rock," Nomura analyst Richard Huang 
said in Hong Kong. 
    Macau's shift towards the mass market plays into Beijing's 
overall strategy to make the former Portuguese colony a 
world-class tourism hub rather than a playground for corrupt 
officials and businessmen.  
    In a first for the territory, Melco Crown Entertainment Ltd 
 MPEL.O , a venture co-owned by Macau mogul Lawrence Ho and 
Australian tycoon James Packer, opened a $3.2 billion 
Hollywood-themed casino in October with no VIP gaming tables. 
    Speaking to investors after the opening, Ho said Macau's VIP 
sector had been "permanently and structurally changed". 
     
    BAD LUCK 
    The Dore scandal could not have come at a worse time for 
Macau's junkets, the companies or individuals who loan credit to 
gamblers, mainly VIPs, on behalf of Macau's casinos.  
    Revenues have dried up due to China's economic slowdown and 
an anti-corruption campaign that has targeted the flight of 
illicit capital from the mainland. Analysts estimate the number 
of junket tables has fallen by a third since the start of 2015, 
and about 100 junket operators have gone out of business. 
    Dore, which operated 3 VIP gaming rooms in Wynn Macau, 
reported in late September that an employee had pocketed money 
that was meant to open new credit lines to big-spending 
gamblers.      
    Police say more than HK$500 million ($64.52 million) was 
stolen, although investors say the sum is closer to HK$2 
billion.  
    Steve Vickers, former head of the Hong Kong's criminal 
intelligence bureau and founder of a risk consultancy, said 
about 50 prominent members of Hong Kong's entertainment industry 
were among those defrauded.  
    "This is not surprising; the triads have long had symbiotic 
links with both the junkets and the entertainment sector," he 
said. 
    Many investors say Dore's boss, Charles Heung Wah Keung, an 
alleged triad crime gang member, should stand up and be 
accountable for their losses.  
    "Dore's boss Charles Heung has taken the victims' blood and 
sweat ... Heung is devoid of a conscience," said protester Lydia 
Chen, 40, who lost millions of dollars she loaned to Dore 
earlier this year. 
    Heung - who was named in a 1992 U.S. Senate subcommittee 
probe and a 2007 Nevada Gaming Control Board hearing as a member 
of a triad crime gang - has strongly denied involvement in 
organised crime and has not been formally implicated in any 
wrongdoing. He could not be reached for comment. 
    Macau's government has offered little comfort to Dore 
investors, saying only that an investigation is ongoing. 
    While many junket operators have gone out of business, top 
firms like Suncity and Tak Chun are likely to weather the storm, 
analysts said.  
    Both firms have used slick marketing and sponsorships of 
high-profile events like the Macau Grand Prix to present a more 
sophisticated image than their peers.      
 
($1 = 7.7498 Hong Kong dollars) 
 
 (Reporting by Farah Master; Editing by Stephen Coates) 
 ((farah.master@thomsonreuters.com; +852 28431631 , +852 9631 
8262; Reuters Messaging: 
farah.master.thomsonreuters@thomsonreuters.net)) 
 
Keywords: MACAU GAMBLING/