MACAU BUSINESS
Key top court decision on Dore VIP debt The Court of Final Appeal (TUI) upheld a ruling of the
Court of Second Instance (TSI) that previously found gaming concessionaire Wynn Resorts (Macau) jointly liable alongside junket operator Dore Entertainment Co. Ltd for the repayment of a HK$6 million (US$747,482) debt to a VIP player. TUI ruled against an appeal lodged by Wynn over the TSI decision and upheld the ruling that considered the gaming venue’s operator co-responsible for the refund of deposits lodged at Dore Entertainment, the public service broadcaster reported.
The case dates back to 2015 when junket operator Dore
premium mass customers,’ a note from investment bank UBS Global indicated. According to UBS, market expectations for a VIP recovery
were already low seeing VIP GGR getting back to about 50 per cent of the 2019 level in 2023, with any changes unlikely to materially impact EBITDA given potential demand shift towards higher-margin direct VIP and premium mass segments. ‘As junkets shrink, some players may well shift to premium
mass, which will help drive that segment’. Meanwhile, brokerage firm JP Morgan Securities (Asia
Pacific) also stressed in a note that Mr Chau’s detention sends “a chill down the spine of any and all junkets”. In addition to the VIP segment, premium mass revenue is also set to be negatively impacted by the arrest warrant issued by mainland authorities on Suncity boss Alvin Chau, gaming analyst Alidad Tash told Macau News Agency. “By targeting the largest and most high-profile junket
operator, a clear message is being sent”, stresses Alidad Tash, managing director at 2NT8 who anticipates that the “Government will be asked to define the vague areas that junkets operate within, especially in light of the soon-expiring licenses. Casinos, junkets and some residents will demand to know what is and what isn’t legal”. As a result, gaming promoters will tend to “freeze the shady area of their businesses, until they get a clearer picture from the government”. The JP Morgan analysts also underscore the across-the-
board effect of Chau’s detention by noting that “The fact that even he can be arrested – for just running the junket and doing (what seems to us like very) normal junket activities – should send a chill down the spine of any and all junkets.” The VIP segment could “immediately contract in the coming weeks”, JP Morgan predicts, “perhaps by 30 per cent to 50 per cent from current run-rates”. The brokerage firm adds that they have already modelled VIP only driving 1 per cent to 4 per cent of operators’ earnings before interest, taxation, depreciation and amortisation (EBITDA) in 2023 (or about 2 per cent of sector profit as a whole),”
20 JANUARY 2022
Entertainment Co., Ltd. was the victim of internal theft by casino cage manager Mimi Chow Ioc Mei, who left after stealing HK$700 million from the junket operator, which operated out of Wynn Macau. In 2016, courts had ordered Ms Chow to repay some MOP103 million in funds owed to Dore. At the time of the incident, several people claimed that
they had invested in Dore Entertainment based on the promise of higher returns than those offered by regulated banks, but had lost their money because of the alleged incident. Four of the involved pursued claims totaling HK$64
million, but three of them failed to provide the necessary documentation. The fourth individual was able to produce a receipt showing a HK$6 million deposit made to the cage manager.
Because the deposit contract was made between Dore and the individual, the Court of First Instance (TJB) ruled that the junket operator was responsible for ensuring repayment of the debt, inclusive of court costs and interest on the deposit from September 2015. However, in 2018, the TSI now ruled that Wynn Macau
was jointly liable for a HK$6 million refund, a decision upheld now by the SAR’s top court. This court decision is seen by experts as a landmark
ruling for the city’s casino industry. In an exclusive interview with Macau News Agency and Macau Business, former director of the Gaming Inspection and Co- ordination Bureau (DICJ) Paulo Martins Chan said that a final ruling by the top court on the Dore theft case would be crucial in defining the responsibility held by gaming concessionaires for the actions of junkets. “If the concessionaire is found to be responsible, they will be very careful regarding the junkets and, in addition, the relationship with the junkets will also change. It all depends on the decision of the TUI,” Mr Chan told MNA and Macau Business magazine in June 2020.
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