GGRAsia – Junket lay-off risk if virus lingers: Macau VIP biz rep

Junket lay-off risk if virus lingers: Macau VIP biz rep

Feb 05, 2020 Newsdesk Coronavirus Crisis, Latest News, Macau, Top of the deck

Macau’s smaller casino junket firms – that had already faced a slowdown last year on knocks to Chinese consumer confidence linked to the United States-China trade war – might need to think about laying off staff if the current coronavirus health alert was not resolved quickly.

So said Kwok Chi Chung, president of the Macau Association of Gaming and Entertainment Promoters, a junket trade body, in comments to GGRAsia.

“So far I didn’t hear any [junket] industry members imposing layoffs. Many of them are trying their best to go with the government’s call not to cut salaries of staff or force them to take unpaid leave,” Mr Kwok told us.

“But with the suspension [of casino operations] we have no income. We also do not rule out the possibility that there could be lay-offs in the future, especially amongst the smaller junket firms, if the virus threat persists and casino closures are sustained,” he added.

The Macau government has ordered a 15-day suspension of the city’s 41 casinos from midnight on Tuesday, in the wake of three local residents – including two employed by gaming operators here – getting infected with the coronavirus.

Major Macau junket brands including Suncity Group, Tak Chun Group and Guangdong Group – that run VIP rooms in Macau but are not casino operators in their own right – have confirmed to their customers and collaborators via official social media platforms that they are complying with the government’s casino-closure order.

On Thursday a video was circulating on social media in Macau with a message from Suncity Group boss Alvin Chau Cheok Wa. In it, he reassured industry colleagues that might be “feeling worried or heavy” about the casino closures, that the Suncity brand had notched 13 years in the Macau market and had a “solid foundation” that had weathered VIP industry downturns in 2014 and last year.

He added Suncity was “absolutely capable and confident to work with you through this difficult time”.

Macau’s total number of licensed junkets fell from 100 in January 2019 to 95 at the start of this year, marking the seventh consecutive year of decline in the tally of such entities according to data from Gaming Inspection and Coordination Bureau. The latest fall follows a market-wide contraction of 18.6 percent in VIP gross gaming revenue (GGR) at Macau’s casinos in 2019. VIP revenue accounted for 46.2 percent of the overall casino GGR market in 2019, compared to 54.8 percent in full-year 2018.

Hong Kong-listed Rich Goldman Holdings Ltd – which said it receives profit streams from junket businesses in Macau – said in a Wednesday filing that the Macau government-ordered casinos closures might have a “material adverse impact” on the firm’s financial performance and position.

The same profit warning filing stated that the firm expected a loss for the 2019 interim period, partly due to a decrease in gaming revenue generated from VIP gaming in Macau. Rich Goldman attributed the negative performance to impact from “China-U.S. trade war on China’s economy”.

(Updated 3.25pm, Feb 6)