Inside Asian Gaming

inside asian gaming December 2015 6 J 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 than half of Macau’s gross gaming revenue, factoring in mass tables moved to VIP to beat the smoking ban, down from 73% in 2011. Many high rollers have stopped coming to Macau or 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’s US$1.3 billion heist by junket promoter Huang Shan, reminds investors that junkets pay interest rates as high as 2% a month precisely because providing capital to VIP rooms is risky. In the wake of the Dore scandal, Macau authorities are requiring more financial disclosures by junkets. To rub it all in, Melco Crown opened Studio City in October without VIP rooms, focused solely on higher margin mass market 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 casino ownership the next step in Macau junket promoters’ evolution? Cover Story By Muhammad Cohen , Editor At Large Muhammad Cohen also blogs for Forbes on gaming throughout Asia and wrote Hong Kong On Air , a novel set during the 1997 handover about TV news, love, betrayal, high finance and cheap lingerie. Buying the house