That Macau casino heist is starting to wallop the entire gambling industry
(Reuters)
The biggest players in the global casino industry are starting to feel the painful fallout from a multimillion-dollar heist earlier this month at Wynn Macau.
On Wednesday, the sector heavyweights MGM, Wynn Entertainment, Las Vegas Sands, Melco Crown Entertainment, and SJM Holdings were all down between 2% and 6% after trading ended in Hong Kong.
The carnage continued into the US market open.
In a note out Wednesday, Deutsche Bank said the decline was the result of suspected theft from the junket Dore Holdings operating within Wynn Macau, according to Bloomberg's Lisa Pham.
Dore said an employee was suspected of stealing HK$100 million, or around $13 million, according to the Bloomberg report. Thirty other people have filed complaints that they were cheated out of HK$330 million, or around $38 million, Bloomberg said.
The pool of money junkets use comes from investors who for years have expected returns of 1% to 2% from the proceeds of high-roller winnings.
Wynn said Dore did not owe the casino any money, so it wasn't suffering individually.
The problem instead is that the entire junket system has less cash in general, so it is now loaning high rollers less money to play with. That means less money for everyone. Investors are redeeming their cash.
"Gross gaming revenue fell 19% to 493 million patacas ($62 million) a day last week, or 18% below the average so far this quarter," Deutsche Bank analyst Karen Tang said in the note, according to Bloomberg.
High rollers were already playing with less, after an earlier theft in 2014 led to 16% of all the junkets on Macau closing.
"As a whole, the junket segment never recovered from this liquidity squeeze," the investment bank Daiwa said in a note earlier this month reporting the heist.
This is the last thing Macau needed. Monthly gaming revenues have been down 30% to 50% from the same time a year before. Chinese President Xi Jinping's anti-corruption campaign is scaring mainland gamblers, especially the ones with money to burn, away from the island.
Before we know it, the entire industry could change.
Last updated (2:40 p.m.): An earlier version of this story said that $256 million had been stolen in the heist, a figure that was based on an estimate from Daiwa Capital Markets. This story has been updated to reflect Dore's statement last week that the losses were HK$100 million, or $13 million.
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