GGRAsia – Investor claims in Dore junket case up to US$57 mln

Investor claims in Dore junket case up to US$57 mln

Sep 24, 2015 Newsdesk Latest News, Macau, Top of the deck

Claim complaints reported to Macau police from those presenting themselves as investors in the cage operations of junket operator Dore Entertainment Co Ltd have increased to at least HKD440 million (US$56.8 million), Radio Macau reported on Wednesday quoting a police source.

The police spokesperson said the number of complaints has now gone up to 42, up from 30 complaints it had received as of September 16. Dore has also filed a police report.

Macau junket operator Dore Entertainment Co Ltd, which operates VIP facilities at Wynn Macau, said in a statement a fortnight ago it had been a victim of internal fraud by a former employee.

Several people claiming to be investors in the cage operations of Dore have made repeated public calls for help from the authorities to enable them to withdraw cash deposits placed with the junket operator.

It is common for junket operators in Macau to raise capital for their rolling chip programmes by offering private investors above-market interest rates for their deposits. Some media reports claim Dore was offering a 2 percent per month interest rate.

Macau’s gaming regulator, the Gaming Inspection and Coordination Bureau, issued a statement clarifying that only credit institutions “which have been duly constituted and authorised” may accept deposits and other repayable funds from the public.

“Illegally accepting deposits [from the public] is a criminal activity,” the bureau stated, adding that only shareholders or administrators of junket operators that have been subjected to a suitability check will be legally recognised.

The gaming regulator also announced that it would revise the rules for issuing a licence to a gaming promoter, in a bid to improve the transparency of the junket industry.

Investment analysts have said that gross gaming revenue in Macau fell about 19 percent week-on-week after the Dore incident, as junkets reduced lending to preserve cage cash to meet withdrawal demands.

“The key risk is that there is contagion to other junkets over concerns from agents and junket investors about junket liquidity,” Brokerage Sanford C. Bernstein Ltd said in a note on Monday.

“There is concern in the market that the Dore situation is more tied to liquidity associated with underground banking and the facilitation of currency movement from China into Macau and Hong Kong,” said the brokerage team.

Several analysts have also suggested that the revision of junket regulation could intensify industry consolidation, helping to restore confidence within the sector.