Wynn Loses in Junket Theft

At last count, an employee of Dore Holdings, a junket operator with a room at the Wynn Macau, reportedly absconded with millions in revenues from the resort’s VIP room. Wynn Resorts says the theft has nothing to do with the integrity of its operations or that of Dore Holdings. But Wynn shares have taken a hit from the widely publicized scandal.

In a note cited by the Financial Times, Daiwa Capital Markets said staff at Dore Holdings “allegedly fled with between HKD200 million and HKD2 billion (US$258 million).” The latter figure was later revised, and the missing funds apparently total about $50 million.

Wynn spokesman Michael Weaver said the “current reported concerns have no direct financial impact on Wynn Macau.” But shares of the company dropped by 3.55 percent on the news, to their lowest level since mid-2010.

A similar incident took place in April 2014 when an agent with VIP room operator Kimren took off with between HKD8 billion and HKD10 billion, “creating a situation that allegedly scared away some of the investors who provided financing to junkets,” the Daily Times suggested.

Daiwa analyst Jamie Soo concurred, saying, “As a whole, the junket segment never recovered from this liquidity squeeze. We are already seeing signs of this today, with individuals purportedly rushing to the junket (Dore) in an attempt to withdraw funds.”

Several analysts agreed that Dore’s problems are unrelated to Wynn, adding that the junket operator is small potatoes in the market. Overall, said Sterne Agee analyst David Bain, “We believe the apparent theft at Dore Group will likely only have a minor negative impact on VIP market gross gaming revenue as we see VIP softness as demand-driven, not credit-driven.” And Kenneth Fong of Credit Suisse said there was “no financial risk” to Wynn Resorts.