A recent ruling by Macau’s Court of Final Appeal, holding Wynn Macau Ltd to be a party liable to refund a deposit lodged with VIP gaming promoter Dore Entertainment Co Ltd, meant the city’s junket operators might face tougher terms when dealing with the casino operators in the future, suggested several industry commentators to GGRAsia.
“Even without any… enhanced licensing threshold for junket operators, the casino operators will likely make very demanding… requirements for junkets seeking partnership opportunities,” remarked former junket investor Luiz Lam.
Mr Lam added: “Should we see eventually some better days for the VIP gaming business… newcomer junkets may find it extremely challenging to land a place at Macau casinos, as the operators may look for only those that are highly reputable or have an excellent track record in the sector, and are very well financed. And there are only very few such junket operators left in the market.”
Macau-based gaming lawyer Bruno Ascenção shared a similar view: “Gaming operators will seek to demand further financial guarantees from the junkets considering that most [of the VIP gaming promoters] have little to no assets… to honour their obligations to potential creditors in case of default.”
“Overall, gaming operators will be more reluctant to engage contractual obligations with junkets as the potential risks outweigh the benefits, especially as the regulatory landscape and increased oversight are seen as increasingly hostile” for the junkets, the gaming lawyer added.
The latest ruling by the city’s highest court is related to a high-profile 2015 incident of alleged theft of large amounts of Dore Entertainment money by an ex-cage manager from a VIP room at the Wynn Macau casino hotel.
At the time, a number of people came forward claiming to have provided capital to Dore Entertainment on the promise of higher returns than those offered by regulated financial entities such as banks, but were unable to get back their money.
Quality junket partners
Mr Lam told GGRAsia: “Since the Dore case surfaced in 2015, it resulted in casino operators having enhanced scrutiny of their junket partners, and [operators] tightening the terms of any credit extended to them. Business became more difficult for junkets, and that became one of the factors contributing to the continuous decline seen in the number of licensed junkets.”
A total of 85 gaming promoters was licensed with the Macau government as of January, according to the latest available data from the city’s gaming regulator. The tally of such promoters has declined for eight consecutive years.
The licensed junket tally does not include so-called “collaborators” or sub-agents, that have traditionally worked with Macau’s junket operators to bring in high-value players.
The Court of Final Appeal ruling would make life harder for sub-agents, suggested Mr Lam. He added they were already facing headwinds due to the downturn in business amid Covid-19 and the Chinese government’s ongoing crackdown on overseas gambling.
One positive for junkets to come from the ruling – as identified by Mr Lam and local lawyer Sérgio de Almeida Correia – was that it clarified that a Macau gaming licensee is a liable party regarding activities conducted inside the licensee’s casino by any gaming promoter registered with the licensee.
The Court of Final Appeal had moved to “remedy the lack of adequate control and transparency,” that had existed “for decades,” said Mr Correia, a Macau lawyer with a specialist knowledge of gaming-related topics.
Macau’s highest court “did well”, and did so “unanimously”, stated Mr Correia, adding “this decision reinforces the credibility of gaming operations in Macau”.
The lawyer also observed that as the Macau government now had the benefit of the ultimate legal ruling on the matter, the government could take “appropriate measures” to avoid “future problems”.
Mr Correia added this was “crucial,” in order to “reinforce the international reputation of the Macau SAR and its casinos”.
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