GGRAsia – MGM China warns US$26mln liability in junket deposit cases

MGM China warns US$26mln liability in junket deposit cases

Mar 11, 2022 Newsdesk Latest News, Macau, Top of the deck

Macau casino operator MGM China Holdings Ltd says it might be liable for as much as HKD202.7 million (US$25.9 million) regarding cash deposits individuals respectively claim were placed with gambling junkets that had been working with the casino company.

The group has been named as a defendant in three civil cases relating to cash allegedly placed with an aggregate of two junkets that had been active at its MGM Macau resort (VIP entrance pictured), it said in its annual report filed with the Hong Kong Stock Exchange on Thursday.

The plaintiffs have respectively claimed the junkets – known in Macau as gaming promoters – failed to honour the withdrawal of such cash deposits.

MGM China has already lost one of the cases at Macau’s Court of Final Appeal, with its final submission dismissed “in February” this year.

It resulted in a liability in that matter amounting to HKD117 million, including a HKD80-million principal and accrued interest.

MGM China said that upon payment to the plaintiffs, it was “entitled to claim from the gaming promoter the reimbursement, in all or in part, of the amount paid, in a separate lawsuit.”

But it noted in its filing that “in light of the recent developments impacting” that particular junket’s activities, “it is predicted that the chance to recover the loss suffered through the payments to be made by the group, is remote”.

The filing did not name the junket. Such gaming promoters require a licence from the Macau government.

According to recent statements by Macau gaming operators, the industry’s cooperation with Macau-licensed junkets was largely paused during the fourth quarter of 2021. That has coincided with two high-profile figures in the local junket segment being detained on suspicion of facilitating illegal forms to gambling.

In all three junket-deposit litigation cases faced by MGM China, the group had been sued “based solely on the joint liability of the concessionaire for the actions and conducts of the gaming promoters engaged by it at its casinos, as contemplated in article 29 of Administrative Regulation no. 6/2002, governing the licensing and activities of gaming promoters,” the firm said.

It added: “Considering the similar nature of the three legal proceedings, the group has estimated the possible financial loss arising from these legal proceedings, and recognised a liability of HKD202.7 million at December 31, 2021 in payables and accrued charges.”

A November ruling by Macau’s Court of Final Appeal had held another Macau operator, Wynn Macau Ltd, to be a party liable to refund a HKD6-million deposit lodged with VIP gaming promoter Dore Entertainment Co Ltd.

A gaming law amendment bill – currently being scrutinised in the city’s Legislative Assembly – states the joint liability that gaming concessionaires and gaming promoters must bear, regarding junket-generated VIP business. It includes that gaming concessionaires will have a duty to inform the city’s casino regulator of any matters that might potentially affect a junket’s ability to cover its loans or financing requirements.