Controversial Saipan Casino Project Books $415.3 Million Loss in 2018, as VIP Revenue Dries Up
Posted on: March 29, 2019, 12:30h.
Last updated on: March 28, 2019, 05:41h.
Imperial Pacific International, developer of the Imperial Palace Casino on the US Pacific island of Saipan, posted a $415.3 million loss for 2018, citing a dramatic fall in VIP revenue.
This is a far cry from the early months 2017 when Bloomberg noted that a temporary casino housed inside a shopping mall — ostensibly to train dealers while the main casino was being built — was generating more than half of the revenue from its 16 VIP tables as the Wynn Macau’s 178 high-stakes tables in the world’s biggest gambling hub.
But 2018 has been a challenge for Imperial Pacific. The company cited the disruption caused by Typhoon Yutu in October – which closed the island’s airport for a month – as a reason for the drop off in VIP attendance, as well as the World Cup, which preoccupied Asian gamblers for a month over the summer.
The Imperial Palace is now open to gamblers, but it is being built in phases, and is not yet finished. Imperial Pacific missed a deadline for completion in December and was granted an extension by island authorities – already its second – until February 2021.
Hundreds of Millions of Bad VIP Debt
Imperial Pacific is controlled by mother and son Cui Lijie and Ji Xiaobo, who made a fortune in the Macau junket industry in the 2000s, and the unfinished casino relies almost entirely on a stream of high-rolling Chinese gamblers supplied by the junkets.
Closure to the airport meant than not even private jets could access the island, which is one of the US’s remotest territories, and the casino briefly shut down operations completely.
But the company said it has also been hit by a glut of unrecoverable high-roller debts, of which it has been been forced to write off more than $624 million. Most of this is owed by just ten customers.
VIP debts deemed to be recoverable stand at $1.2 billion, 50 percent of which have been outstanding for more than a year.
It seems the only Imperial asset that gained any serious momentum in 2018 was its boardroom doors, with four top level executives resigning from late 2017 to the end of 2018, including its CEO and chairman, Henry Cheang.
In December, the company said it would sue unnamed rumormongers on social media who had alleged it was “bankrupt,” denouncing the suggestion as “slanderous, fake news.”
Having secured its second extension to complete the project, Imperial promptly laid off 80 construction workers, despite having blamed the delay on a “lack of skilled labor.”
Earlier this month, seven Chinese construction workers launched legal action against the company claiming that it “knew about or, at a minimum, recklessly disregarded” illegal practices by its construction contractors, who have been accused of press-ganging workers into forced labor.
Several contractors have been ordered to pay $13.9 million in back wages and damages as part of a settlement with the US Labor Department over the maltreatment of workers. In May 2017, the FBI raided the construction site and found the majority of those employed were working illegally without visas.
Nevertheless, Imperial was upbeat about the project’s future.
“Benefiting from Saipan’s favorable weather, stunning attractions, proximity location and flexible visa policies, with more hotels room to be built and opened, we believe visitation to the Island of Saipan still has great potential,” it chimed.
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