The financial woes of Macau casinos are not showing any signs of ending in view of their sliding revenues and heavy crackdown by Chinese authorities to end nexus between criminal mobs and gambling firms. The city’s top five junket operators which brought Chinese high-rollers from the mainland announced that they would close their VIP gaming facilities to cut costs.
David Group has announced closure of gaming rooms in Wynn and MGM among others. The anti-corruption drive of China’s president followed by strong pressure by gaming authorities in other nations to reduce criminals in the business has made it unprofitable for junket operators to transport high rollers across international borders.
Chinese clampdown on illegal gaming
Research analysts state that this is among the largest closures in the gambling city which is likely to be first in a series of similar closures of junket trips. This scaling down of operations is also likely to reduce prices of VIP rooms in the top end hotels in the Macau area which presently charge nearly HK $100,000 as deposit. A recent report in Business Insider states that research team of brokerage firm CLSA has predicted a decline of 13 percent in VIP revenues at Macau this year followed by 9 percent fall in gaming revenue. While last year revenues fell by wide margin across Macau, this year will be tougher due to slowdown in China’s economy and local officials attempt to reduce graft.
Appeal from President Xi to Macau
The share prices of Macau’s casinos have fallen between 32-52 percent in 2014 among which the worst sufferer was Melco Crown, which has already requested for de-listing its name from Hong Kong bourse. During a visit to the island, President Xi urged Macau to immediately setup measures to restrict illegal currency flow and reduce use of UnionPay debit cards. Analysts state that the next junket operator to consolidate services would be Neptune Guangdong Group.