Inside Asian Gaming

inside asian gaming February 2015 40 Feature Macau junket operator David Group to consolidate local operations and expand overseas Time to Regroup and Refocus W hen times are tough, there’s a tendency for the rumor mill to shift into overdrive. Last month, media reports picked up a note from Japanese investment bank Nomura claiming that Macau junket operator David Group intended to wind down its operations. It turns out that rumors of David Group’s demise have been greatly exaggerated. On 16th January, the company’s director of corporate communications, Frank Ng, clarified the group merely intended to consolidate its operations in Macau amidst the ongoing decline in local VIP gaming revenue, closing, at least for the time being, three of its seven VIP rooms in the city. He added that the company is closely monitoring market conditions and can reopen the rooms if and when the business climate improves. “We’re hibernating. Once we wake up, we can restart,” he said. Meanwhile, David Group intends to reallocate its resources to explore emerging opportunities overseas. “This move aims to attract foreign patrons in order to diversify the visitor base of Macau’s tourism industry,” said Mr Ng. In the current quarter, the group plans to establish VIP operations in Manila, the Philippines, Da Nang, Vietnam and Jeju, South Korea. The group is also eyeing expansion in Australia by the end of the year, and is pursuing expansion plans in Europe. Junkets generate the majority of Macau’s world-leading gaming revenues, more than 60% historically, by arranging travel to casinos for their wealthy clients, mostly mainland Chinese, and providing them credit in exchange for a share of the win in the rooms they operate, which is generally around 40% by agreement with the casinos. But their profits in Macau have been battered over the last year as mainland VIPs are avoiding the city in increasing numbers due to several factors. The market suffered its first year-on-year decline in gaming revenue in the post-monopoly era in 2014, dipping 2.6% Pivoting with the prevailing winds, David Group, which has operated in Macau for a decade and is ranked as one of the city’s 10 largest junkets with an estimated 3-5% market share, is joining leading competitors such as Suncity Group and Hengsheng Group in diversifying into other businesses and into new and emerging gaming markets.