IAG December 2015 - page 6

unket promoters say they’re bearing the brunt of
Macau’s gaming slump. VIP revenue fell 11% last year
and 41% through the first three quarters of this year,
well ahead of Macau’s overall decline. Union Gaming
Securities Asia estimates VIP play now constitutes less
thanhalf ofMacau’s gross gaming revenue, factoring inmass tables
moved toVIP tobeat the smokingban, down from 73% in 2011.
Manyhigh rollershavestoppedcoming toMacauor substantially
cut back on their play amid China’s anti-corruption crackdown and
greater scrutiny of money transfers. Debt repayments to junkets
have slowed and assets securing loans have lost value. The theft
from junket room operator Dore Group in September, after last
year’sUS$1.3 billion heist by junket promoterHuang Shan, reminds
investors that junkets pay interest rates as high as 2% a month
precisely becauseproviding capital toVIP rooms is risky. In thewake
of the Dore scandal, Macau authorities are requiringmore financial
disclosures by junkets. To rub it all in, Melco Crown opened Studio
City inOctober without VIP rooms, focused solely on highermargin
massmarket play.
Junket promoters have reduced their Macau operations over
the past 18 months and some of the smaller ones have closed
shop. Top five junket Neptune Group, in its annual report released
in September, calls its liquidity position “extremely vulnerable” and
they have contemplated pulling out of Macau. While some analysts
Is casinoownership the
next step inMacau junket
promoters’ evolution?
Cover Story
, EditorAtLarge
blogs for Forbes on gaming
throughout Asia and
, a
novel set during the 1997
handover about TVnews,
love, betrayal, high finance
and cheap lingerie.
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