Wynn and Melco are at “risk” in Macau

The analysis emerges after two consecutive years of decline in casino’s revenues.

Macau was conceived as the biggest gambling hub on the world but latest results are shadowing the city.

Macau.- According to Daiwa Securities Group –second largest securities brokerage globally–, Wynn Resorts in Macau and Melco Crown Entertainment could be the most risky casino operators as to exposition to debt-ridden gaming promoters in the casino region of China. The data reveals that both companies hold the “riskiest slice of the industry’s junket business” for their amount of revenue in comparison with other local operators exposed to the high-stakes gambling sector.

“This problem of rising bad debts continues to be a major issue in Macau, and is among the key drivers for the successive junket mergers and closures that we continue to see today,” expressed Daiwa Securities’ analyst, Jamie Soo in Hong Kong. Gaming promoters at Macau faces major operating pressure with HKD$30 billion –USD3.9 billion– in bad debt. The regional government is compelled to compensate investors cheated by former employee at a junket operator, which suggests the risks and responsibilities casinos and operators are going through.

“Junket operators” boost a VIP casino experience in Macau that leads to great amount of money bet. Currently, Macau’s revenues have been suffering a constant decline where industry used to be calculated at US$30 billion. The lower VIP betting experiences could be one of the reasons to explain the decline. The proposals to investigate great investors in the country have led to reduced gaming earnings, as well. Junket operators are being deeply scrutinised after the Chinese President XI Jinping’s anti-graft campaign.

The stricter scrutiny began last September with the Dore Entertainment incident. The complex announced that various customers may have been cheated by a former cashier manager who is believed that has stolen HKD$100 million –US$12.9 million–. The current process of the legal case can lead to the exposition of casino operators who allow the junkets to work in their establishments. So far, 35 junket operators were denied licence renewals.