Macau has struggled to attract mass market audiences to its casinos, meaning that the territory’s gaming industry is still highly dependent on high rollers, as well as the junket operators who bring them into the VIP rooms in major casinos.
That’s why news of a major theft from one of Macau’s bigger junket operators has once again sent shockwaves through the city’s already reeling gaming industry.
Daiwa Capital Markets, a Hong Kong-based investment bank, published a report on Thursday claiming that as much as $258 million may have been stolen from a junket that operated inside the Wynn Macau.
While the casino itself wouldn’t be on the hook for any lost funds, the loss for the junket could harm its ability to bring in big money clients, which in turn could exasperate the problems already facing Macau casinos.
Dore Holdings Suspects Employee in Theft
The theft, which impacts junket operator Dore Holdings, was the suspected work of one of their employees who worked inside the casino, likely in one of the operator’s private VIP rooms.
The actual amount lost by Dore isn’t precisely known, and could be as little as ten percent as the widely reported $258 million figure.
There have certainly been cases in the past where such losses were initially inflated, and the actual damage was much less.
However, even a lower amount could still cause serious problems for the Macau high roller market.
Thefts such as these have the potential to drive investors away from the junkets, which in turn dries up the credit necessary for high rollers to come play in Macau.
This has happened before. A theft that impacted Kimren, another major junket operator, last April led to a sudden drop in investment in many other junkets as well, something that Daiwa’s analysts fear may happen again.
“As a whole, the junket segment never recovered from this liquidity squeeze since,” Daiwa wrote in its report on the latest heist. “We are already seeing signs of this today, with individuals purportedly rushing to [Dore] in an attempt to withdraw funds.”
Loss of VIP Client Base Could Further Undercut Macau Casino Revenues
Fears such as these likely explain why Wynn Resorts has seen its stock price tumble on the news.
While the casino may not be directly on the hook for the money, another crunch in the junket market could drive VIP gambling down even further, and there’s also the potential for the Wynn Macau to have to write off some bad debt, though the casino says that Dore does not owe them any money.
These aren’t the kinds of concerns that Macau casinos want to be dealing with at the moment.
For over a year now, the gaming industry in the Chinese enclave has been dealing with revenue declines, with most months seeing year-over-year drops of between 30 and 50 percent.
The drop in revenues has primarily been caused by an anti-corruption drive by the mainland Chinese government that began in early 2014.
With more scrutiny on the flow of money from China to Macau, revenues for casinos there plummeted: the same industry that brought in a record $4.8 billion in February 2014 saw revenues fall to just $2.3 billion in August.