The Studio City casino resort (pictured) in Macau’s Cotai district will continue “VIP rolling chip operations” until January 2021, the parent company, Hong Kong-listed Melco International Development Ltd, said in a Tuesday filing.
In January last year, the group had announced that it would shutter VIP operations at Studio City by this January.
Tuesday’s filing on the continuation of VIP play at the resort did not clarify if the company was referring to all VIP operations at the property, namely in-house VIP play and VIP play offered via external junket partners.
Studio City International Holdings Ltd, the controlling entity of the Studio City casino resort, is a listed subsidiary of casino developer and operator Melco Resorts and Entertainment Ltd. The latter’s subsidiary, Melco Resorts (Macau) Ltd, runs the gaming operations at the Studio City property. Melco Resorts and Entertainment is a listed subsidiary of Melco International, a firm controlled by gaming entrepreneur Lawrence Ho Yau Lung. Mr Ho is also the group’s chairman and chief executive.
Melco International said in its Tuesday filing: “On 14 January 2020, Studio City [International] announced that the gaming operator [at the property] had informed Studio City [International] that, the gaming operator will continue VIP rolling chip operations at the Studio City casino until 15 January 2021, subject to termination by a 30-day notice.”
Melco International did not specify reasons for the decision. A press release on Tuesday from Studio City International also did not address the rationale.
The history of VIP play at Studio City is a mixed bag. When the property opened in October 2015, it had no VIP play. At the time, Mr Ho – then co-chairman as well as chief executive of what was then Melco Crown Entertainment Ltd – said that was a “business decision” related to the number of new-to-market live dealer tables allowed at the property by the Macau government.
In August 2016, the casino operator stated it planned to add VIP play to the gaming at Studio City. The announcement followed some commentary from investment analysts about a slow ramp up in Studio City’s gaming business. It was later announced that VIP operations were starting in early November that year.
In October 2019, on a conference call to discuss the group’s third-quarter earnings, Mr Ho said that the group had earmarked “US$1.35 billion to US$1.4 billion” for the extension of its majority-owned Studio City property. The expansion plans include two hotel towers, a cineplex, “one of the world’s largest indoor water parks” and “additional gaming space,” said the CEO. Construction work for an ice rink at Studio City was “well under way, with the opening anticipated in mid-2020,” he added at the time.
Melco International remains the controlling shareholder of Studio City International, with a 54.3-percent voting interest in the company, according to Studio City International’s most recent annual report.
In May last year, a minor partner in the Studio City property, New Cotai Holdings LLC, filed for protective bankruptcy in the United States, citing “unanticipated declines in the Macau gaming market” and a lower-than-anticipated allocation of gaming tables as some of the reasons for its trading woes. New Cotai is backed by investment funds Silver Point Capital LP and Oaktree Capital Group LP.
Macau’s casino gross gaming revenue (GGR) contracted 3.4 percent year-on-year in 2019, shows data from the local regulator, the Gaming Inspection and Coordination Bureau. According to Macau’s Secretary for Economy and Finance, Lei Wai Nong, the overall decline was related to a contraction in GGR generated by VIP play, down by 18.5 percent in year-on-year terms.
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