Market Overview

Junket Theft Charges Could Lead To More Government Regulation In Macau

Junket Theft Charges Could Lead To More Government Regulation In Macau
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  • Channel checks in Macau indicate a 32 percent yearly decline in September gaming revenue.
  • The recent criminal charges involving Dore Entertainment could result in more regulation of junket operators.
  • Wynn Resorts, Limited (NASDAQ: WYNN), MGM Resorts International (NYSE: MGM) and Melco Crown Entertainment Ltd (ADR) (NASDAQ: MPEL) have all gained market share in September at the expense of Las Vegas Sands Corp. (NYSE: LVS).
  • In a new report, Sterne Agee CRT analyst David Bain discussed the results of the firm’s most recent channel checks on Macau gaming companies. Bain also highlighted what he sees as a growing risk of regulatory headwinds for Macau operators.

    GGR Checks

    After channel checks on September 1–20 performance, Bain projects an overall September gross gaming revenue (GGR) number of MOP17.5 for Macau – a 32 percent year-over-year (Y/Y) decline.

    He noted that Macau GGR numbers should see a boost from the upcoming Mid-Autumn and Golden Week holiday period.

    Related Link: Macquarie Says It's "Too Early To Call The Bottom" On Macau, Recommends MGM

    Dore Blowback

    Macau junket operator Dore Entertainment Corp recently filed a police case alleging that an ex-cage manager stole up to $258 million from the company.

    In his report, Bain expressed concern that the crime will further pressure the Macau government to crack down harder on junket operators. “Macau’s Gaming Inspection and Coordination Bureau now says it will look to strengthening requirements for junket/promoter capital and shareholder structures, and look to potentially tighten rules for junket/promoter accounting and auditing,” he explained.

    Market Share

    So far in September, channel checks indicate that the biggest month-over-month Macau market share gainer in Macau has been MGM Resorts International (+3.2 percent). Wynn Resorts (+0.5 percent) and Melco Crown (+0.9 percent) have also gained share at the expense of Las Vegas Sands (-6.0 percent).

    Sterne Agee CRT currently has Buy ratings on Las Vegas Sands, MGM, Wynn and Melco Crown Entertainment.

    Disclosure: The author owns shares of Melco Crown Entertainment.

    Image Credit: Public Domain

    Latest Ratings for LVS

    Dec 2016Aegis CapitalInitiates Coverage OnBuy
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    Posted-In: David Bain Dore EntertainmentAnalyst Color Long Ideas Travel Analyst Ratings Trading Ideas General Best of Benzinga


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