GGRAsia – Junket firm Dore to shut one VIP room: Wynn Macau

Junket firm Dore to shut one VIP room: Wynn Macau

Oct 26, 2015 Newsdesk Latest News, Macau, Top of the deck

Macau junket operator Dore Entertainment Co Ltd is shutting down one of the three VIP rooms it promotes at casino hotel Wynn Macau (pictured). The news was confirmed to GGRAsia by Wynn Macau Ltd, which owns and manages the property.

“We can confirm that Dore will return one of their three junket rooms at Wynn Macau on October 31,” a company spokesperson told GGRAsia. “This is in accordance with Dore’s plan to scale down their business operations,” the spokesperson added in an emailed reply.

Dore confirmed in September it had been a victim of internal fraud by a former employee. The junket firm said in a statement that a former cage manager “allegedly used her power to conduct unauthorised actions without the company’s knowledge”.

Claim complaints reported to Macau police from those presenting themselves as investors in the cage operations of Dore have reached at least HKD520 million (US$67.1 million), reported earlier this month Macao Daily News. The Chinese-language newspaper quoted the police saying they had received a total of 49 complaints related to the case. These people are demanding Dore allow them to withdraw cash deposits allegedly placed with the junket operator.

Dore has never publicly disclosed how much the employee reportedly stole. The firm only stated it amounted to more than HKD100 million.

It was common practice for junket operators in Macau to raise capital for their rolling chip programmes by offering private investors above-market interest rates for their deposits. The capital raised was then used to extend credit to VIP players, usually coming from mainland China.

The alleged fraud case in Dore however scared away some investors, implying a sector wide liquidity crunch, said investment analysts.

“It is our understanding that junket investors of all stripes are increasingly asking for redemptions,” Union Gaming Securities Asia Ltd’s analyst Grant Govertsen wrote in a note issued earlier this month.

“It started with the mom and pops, but has now likely spread to include some portion of investors who represent a more substantial proportion of junket liquidity: the VIP players themselves,” the analyst said, adding that a junket liquidity squeeze “could very well be in the cards for the fourth quarter of 2015”.

The high-profile Dore case led to Macau authorities announcing new accounting guidelines for the junket sector. These include junket operators having to compile monthly accounting reports starting next year. Junket operators will also have to file with the gaming regulator details on the key personnel in charge of financial operations.

Brokerage Daiwa Securities Group Inc said in a note on Friday that the stricter rules for junket operators could be “incrementally negative to the sector”.

Gross gaming revenue (GGR) in VIP gaming – a segment heavily reliant in Macau on junket operators – fell by 38.0 percent year-on-year across the whole Macau market during the third quarter of 2015, according to official Macau government data. VIP revenue accounted for 53.32 percent of casino GGR in the three months to September 30, down from 55.51 percent in the previous quarter and from 56.45 percent in the prior-year period.