Government to audit junkets’ bad debts

Macau authorities are looking into the bad debts of VIP gaming promoters, as part of an audit that is estimated to be ready by the end of the year, TDM reports.

In a report released on Friday, quoted by TDM, brokerage Daiwa Securities said total debt outstanding in the VIP segment is at least HK$30 billion (US$3.9 billion) and “could easily be double at 60 billion”.

Earlier in January, the Macau gaming regulator denied 35 of Macau’s gaming promoters from renewing their licenses for failing to submit important accounting information.

The bureau asked gaming operators to submit their financial accounts back in November.

“Before this, we have never had this kind of information before. We have been sending auditors to do the audit work. There must be bad debts and bad debts exist no matter where. But, how bad is the situation? We don’t know until we finish the audit work”, said Paulo Martins Chan, director of the Gaming Inspection and Coordination Bureau, who says he hopes to finish the audit work by the end of the year.

Earlier this week, Daiwa analysts said Macau’s Melco Crown Entertainment Ltd and Wynn Resorts Ltd were most at risk of being exposed to debt-ridden gaming promoters, reported by Bloomberg.

Wynn and Melco hold the “riskiest slice of the industry’s junket business” as they have the biggest slice of their revenue exposed to the VIP segment compared to other casino operators, said Daiwa analyst Jamie Soo in Hong Kong.