Gaming | Junket operator David Group to close some of its VIP Rooms

David Group, a Macau junket operator that serves higher-spending casino customers, is closing some rooms in the city and expanding into other Asian countries as China’s anti-graft drive reduces customer traffic in the territory.
David Group is shutting three of its seven rooms that cater for high-end players at casinos, it said in a statement on Saturday. The company, which runs rooms at casinos including those operated by Sands China Ltd. and Wynn Macau Ltd., is taking the action as part of a re-organization prompted by an industry downturn, Frank Ng, the company’s director of corporate communications, said by phone.
“We’re adjusting our business strategy; this is a general trend in the industry,” Ng said. “We’re hibernating. Once we wake up, we can restart.” The company can reopen the rooms when the market conditions improve, he said.
David Group joined other junket operators including Suncity Group and Hengsheng Group in expanding to markets beyond Macau as the city’s casinos last year suffered their first annual decline in revenue amid Chinese President Xi Jinping’s continuing battle on corruption.
Junket operators arrange trips and provide credit for high rollers, who accounted for 60 percent of the city’s USD44 billion casino revenue last year, to gamble in Macau’s most luxurious private venues.
Nomura analysts led by Stella Xing wrote about the company’s plan to close VIP rooms. David Group is one of the city’s 10 biggest operators, with a 3-5 percent market share, she said, citing unidentified people at industry information provider MGG. Ng declined to comment on the market-­share figure on Jan. 15 or to disclose the company’s casino revenue.
The Chinese government’s clampdown on corruption and extravagance has cut David’s high-­end clients’ spending on gambling tables, he said. The group expects the casino industry to recover from the fourth quarter as more resorts open, boosting customer traffic and revenue, Ng said.
Macau has tightened rules for the transit visas issued for Chinese visitors entering, closing a prior loophole used by many high-end players to go to the city more often and stay longer than normally allowed. The stricter visa rules have diverted more gamblers away from Macau and caused them to go to places with easier access, Ng said.
David Group is taking more wealthy customers to Asian centers with more relaxed visa approval process, such as Manila, Vietnam and South Korea, Ng said. The company plans to enter the Australian market by the end of the year and later to expand to Europe, he said, without providing a timeframe.
David takes its VIPs shopping and sightseeing, and allows them to gamble at its private rooms in local casinos, he said.
As part of its marketing strategies to draw gamblers, David Group publishes a lifestyle magazine in China to promote its brand. It also has a film company. Stephanie Wong, Bloomberg