LVS terminates agreement with three primary gaming promoters
Las Vegas Sands has confirmed that it has terminated its contracts with three gaming promoters as of December 2021.
In its annual report, the parent company of Sands China Ltd. noted that while the gaming operator is dependent on junkets, it harbors concerns as to whether they are able to meet the firm’s “high standards.”
“While we strive for excellence in our associations with gaming promoters, we cannot assure you the gaming promoters with whom we are associated will meet the high standards we insist upon,” said LVS.
“If a gaming promoter falls below our standards, we may suffer reputational harm, as well as worsening relationships with, and possible sanctions from, gaming regulators with authority over our operations.”
This announcement comes after junket magnates Alvin Chao and Levo Chan were arrested – on separate occasions – over illegal gambling allegations.
The arrest of the CEO of the largest junket operator in Macau, Suncity Group’s Alvin Chau, in December for alleged involvement in illegal activities related to online gaming and money laundering has put the city on maximum alert for potential direct and indirect repercussions of the event.
Tak Chun boss Levo Chan was arrested over a month after.
Junket operators have been instructed to cease offering credit to their customers and request that chip purchases only be made upfront and in cash, brokerage Sanford C. Bernstein stated in a note back in December.
The Gaming Inspection and Coordination Bureau (DICJ) has reportedly ordered these gaming promoters to end their loan services to VIP gamblers.
This comes after the reported termination by Wynn Macau of its VIP room on December 20 following the arrest of junket mogul Alvin Chau.
“Some (if not all) other casino operators may also follow Wynn’s move with respect to the junket room operations,” Bernstein analysts said.
In the report by LVS, the group clarified, “We terminated our agreements with our three primary gaming promoters in December 2021.”
According to the current law, junkets are allowed to offer loans through contracts signed with a gaming concessionaire or sub-concessionaire.
Casinos lend the operators chips so they can extend credit to VIP gamblers.
Junkets account for some 75% of Macau’s roughly USD3 billion in annual VIP gaming revenue.
“There can be no assurance we will be able to maintain, or grow, our relationships with gaming promoters or that gaming promoters will continue to be licensed by the gaming regulator to operate in Macau, which could impact our business, financial condition, results of operations and cash flows,’ the group said.
Furthermore, LVS also noted that it cannot be assured as to “what extent the Macau courts will in the future find us liable for the activities carried out by gaming promoters in our casinos, nor are we able to determine what Macau courts would deem typical activities of gaming promoters to be.”
Recently, in an earnings call with analysts, Rob Goldstein, chairman and CEO of LVS, said that customers in the junket business will return in different segments and find new ways of materializing in the casino.
According to the executive, business will just evolve to a different segmentation, adding that the customers are here to stay.
