Macau govt seeking to audit junkets’ bad debts
Macau’s gaming regulator says the government is currently auditing the financial statements of the city’s VIP gaming promoters – also known as junket operators – to assess the amount of bad debts within the industry. The audit work should be ready by the end of this year, Paulo Martins Chan (pictured), the head of the Gaming Inspection and Coordination Bureau, told reporters on Wednesday.
A recent report from brokerage Daiwa Securities Group Inc said the majority of junkets in Macau are “struggling just to break even“. The report estimates that Macau junket operators hold at least HKD30-billion (US$3.87-billion) in bad debt.
On Wednesday, Mr Chan said the gaming regulator in November had asked junket operators to submit their financial statements. The request followed the announcement in October of stricter accounting rules for VIP gaming promoters. According to the new guidelines, all junket operators are to compile and submit monthly accounting reports to the gaming regulator.
“We have never had this kind of information before. We have been sending auditors to perform this audit work [to VIP gaming promoters],” said Mr Chan, quoted by public broadcaster TDM.
He added: “There must be bad debts and bad debts exist no matter where. But, how bad is the situation? We don’t know until we finish the audit work”.
Mr Chan said the bureau hopes to complete the auditing process by the end of this year, reported TDM.
Daiwa’s report qualifies the HKD30-billion figure as “healthy” bad debt, but notes it excludes receivables related to side-betting, stale and “bad” bad debts, adding that it might be “a very conservative estimate”.
Citing industry participants, the brokerage said that the bad debts in the entire junket system in Macau “could, at a minimum, be measured in multiples of the existing ‘healthy’ gaming debt”. These bad debts are distributed more heavily among the city’s smaller junkets, it added.
On Wednesday, the head of Macau’s gaming regulator also confirmed that the bureau is still in talks with representatives of junket operators about the possibility of increasing the amount of capital deposit that any newly-registered VIP promoters must lodge with the authorities.
Kwok Chi Chung, president of the Association of Gaming and Entertainment Promoters, told GGRAsia that one of the possibilities being discussed is to raise the required deposit to MOP10 million (US$1.3 million), from the current MOP100,000 level set in 2004.
Mr Chan told reporters that there was a need to strengthen the financial stability of junkets, but said no final decision has yet been made.
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