Macao junketeers left holding the bag; Lionel Richie wows the ladies

We could see another shakeout in Macao junket operators. According to Daiwa Securities Group, most of the industry is “struggling just to break even.” Part of that problem is that they’re carrying almost $3,9 billion in bad debt — and you can just bet that BaccaratAmerican casino operators in China are now glad that the Nevada Gaming Commission wouldn’t allow them to issue credit over there, leaving the problem in the laps of the junket operators. Add “stale” debt to the so-called “healthy” bad debt and the hole gets even deeper. Part of the problem is simple: With less VIP play taking place, the volatility of that segment becomes considerably greater. Gross high-roller revenue from baccarat fell 40% last year.

Given the withered high-end market in Macao, junketeers are looking toward overseas markets, as near as Vietnam and as distant as Australia, as markets in which to cultivate VIP play. “Generally speaking, the junkets are not actively seeking chances to establish new rooms in the opening Cotai casino resorts. The gaming concessionaires are not actively seeking that either,” was the gloomy prognosis of President Kwok Chi Chung. As of February, only one new gaming license had been issued in Macao. The best that Kwok could say by way of reassurance was “the Studio Cityconditions will no longer be like what we have experienced in the first half of 2015 when the closures were a lot more frequent.” The former police officer is among those favoring a blacklist of bad casino debtors.

Daiwa analysts expect to see a continuance of junket-room closures, as the defaulted-marker problem waxes onward. “The small-, mid-sized junkets continue to bear higher operating pressures as they are negatively impacted by a poorer capital base (i.e., lower ability to have credit extended to them), narrower client reach, and limited ancillary services,” they wrote. To some extent, junket operators only have themselves to blame, as the law currently requires them only to have a small amount of cash on hand. (This may soon change.) As for the casino operators themselves, Wynn Macau and Melco Crown Entertainment have been identified as those most at risk — not good at a time when they’re either coming off megaresort openings (Melco) or on the verge of them (Wynn).

* Penn National Gaming didn’t have much to say in its quarterly earnings call that we haven’t heard before. The only newsworthy takeaways were that low oil prices were adversely affecting its Zia Park racino in New Mexico but, overall, “management again noted a healthier consumer and spoke of modestly increasing visitation and spend per visitor, including amongst the lower tiers of the database,” according to Deutsche Bank analyst Carlo Santarelli. Well, I guess that’s cause for celebration, right? Marquee Rewards has been implemented at the Tropicana Las Vegas and yielded 2,000 bookings, a big step in the right direction. There and elsewhere, Penn remains focused on “margin improvement,” which sounds like code for sweating the loyalty points, an old Penn reputation.

* A Lionel Richie fan I am not (that’s my wife’s domain). And if opening night of his All the Hits show at Planet Hollywood revealed some patchy, worn vocalism, Richie is still entertaining and offers value for the money — the concert ran 110 minutes. And, judging from the number of menopausal women achieving multiple orgasm, Richie’s longevity at The Axis is assured.

* Sheldon Adelson‘s Las Vegas Review-Journal took its water-carrying for a taxpayer-funded stadium to new lengths today when it for the first time, to my knowledge, live-streamed [your city here] Raiders owner Mark Davis‘ presentation to the Southern Nevada Tourism Infrastructure Committee. Stadium coverage now dominates the R-J‘s news pages on an all-but-daily basis.

* Congratulations to the Oglala Sioux Tribe of South Dakota on its new Class III gaming compact. The tribe will now be able to offer keno, roulette, craps, slot machines, and limited card games at its casinos. Elsewhere on the tribal-gaming front, Foxwoods Resorts Casino and Mohegan Sun are assuring Connecticut legislators that their 25% tax accord on slot revenues wouldn’t be breached by a third, jointly owned casino. To this end, they are brandishing a “technical assistance” letter from the Bureau of Indian Affairs that opines that the status quo “would not be affected by a new state-authorized casino.” The two casinos hope to allay the concerns of state Attorney General George Jepsen, who also fears that the duo is not only receiving preferential treatment but is opening the door to wider tribal gaming in the state.

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