Alvin Chau Officially Resigns as Suncity Boss, Analysts See End of Macau Junkets
Posted on: December 2, 2021, 08:50h.
Last updated on: December 2, 2021, 09:10h.
Alvin Chau is officially no longer part of the Suncity Group, the VIP junket business in Macau that made him a billionaire.
Chau was detained in Macau on various allegations of conducting illegal cross-border gaming operations throughout China. Just days later, the 47-year-old announced he would resign as Suncity chairman and executive director. His stepping down became official yesterday, December 1.
Suncity said Chau’s departure is in the best interests of the company, and will also allow him to better focus on the legal complaints against him.
City prosecutors in Wenzhou announced an arrest warrant for Chau last week. Legal officials in Macau later said they were arresting Chau, a born and raised citizen of the Chinese Special Administrative Region, after conducting its own probe into his business dealings.
In the same Hong Kong Stock Exchange filing announcing Chau’s official resignation, Suncity Group confirmed that all of its VIP rooms inside Macau casinos have been closed.
No name in Macau’s junket industry is bigger than Alvin Chau. His arrest signals that Macau and mainland authorities are reaching their tipping point in allowing gaming promoters to continue to operate across the People’s Republic.
Gaming promoters, such as Chau’s fully owned Sun City Gaming Promotion Company Limited, market luxurious trips to mainlanders for exorbitant costs. The junkets advertise five-star travel, accommodations, entertainment, and dining — but are barred from marketing casino gambling.
Wealthy Chinese people pay top dollar to a junket and are then transported to Macau, where they’re often loaned a similar dollar amount of the trip they purchased in gaming chips. Casinos benefit by keeping their VIP rooms bustling, and share part of the gaming revenue with the junket.
Mainland China has urged Macau to lessen its dependency on casino revenue. Macau’s local government has begun to appease that recommendation by encouraging its six casino concessionaires to invest in non-gaming amenities and attractions.
Macau is also reviewing all elements of its gaming industry, which is the richest on the planet. China President Xi Jinping has expressed concerns that allowing mainlanders to use Macau to move their money out of the People’s Republic presents national security concerns.
Asian gaming analysts at JPMorgan believe the days are numbered for junket operators.
It’s probably reasonable to assume junket VIP revenue will go to near-zero levels,” the brokerage said in a note.
Determining the scope of the potential ending of junkets in Macau is difficult. But some executives don’t believe it will greatly hurt their operations.
MGM Resorts CFO Jonathan Halkyard said that while junkets indeed deliver VIP players to Macau, their operations don’t necessarily play a critical role in the overall health of the region’s casinos. He was speaking at Morgan Stanley’s Virtual Global Consumer & Retail Conference this week,
The MGM financial executive said that in terms of EBITDA (earnings before interest, taxes, depreciation, and amortization), junkets do little for each casino’s bottom line.
The CFO said MGM and the five other casino licensees have long been focused on premium mass players instead of junket VIPs. Premium mass customers, the casinos say, spend heavily outside the casino, too.
Related News Articles
Similar Guides On This Topic
Related News Articles
June 17, 2022 — 2 Comments—