Wynn Resorts Junket Operator's Loss Now Pegged at $43 Million

Steve Wynn Attends Wynn Macau AGM
Jerome Favre/Bloomberg
  • Police probes use of blank cheques, 30 people file complaints
  • U.S. union calls for greater transparency in casino industry

Macau’s judiciary police is investigating complaints from parties including a junket operator on funds they were cheated out of, amounting to HK$330 million ($43 million), it said when asked about the Wynn Resorts Ltd. junket theft.

Apart from the junket operator, 30 other people including from Macau and mainland China have filed complaints as of Wednesday, and authorities are probing areas including the use of blank checks and breach of trust, according to the police statement, without naming the junket or casino involved.

The sum was less than previous speculation that put the total as high as $258 million.

Some individuals have indicated they lost money with Dore Entertainment, an independent company that operates high-end gambling rooms at the Wynn Macau casino, Grant Govertsen, an analyst at Union Gaming Group, wrote in a research note Tuesday, citing local police. Some also protested in front of the property over the weekend.

Share Plunge

News of the loss prompted a drop in Wynn Resorts shares last week, as analysts and investors speculated the incident may reduce the amount of money Dore and other junket operators have to lend to their customers. The shares have recovered the past two days, gaining 2.8 percent Tuesday to close at $70.35 in New York. Wynn Macau gained 4.2 percent to HK$10.90 in Hong Kong.

Wynn Resorts has said it didn’t lose any money and isn’t owed any by Dore, while Govertsen wrote that the losses will probably be limited to the junket operator and its investors.

Wynn, based in Las Vegas, said in an e-mail it hadn’t heard any concrete numbers.

Greater Transparency

Dore confirmed last week that a former employee had stolen money from the company and said it filed a police report. The company’s VIP rooms at Wynn were still operating as usual, Govertsen wrote.

Junket operators have played a major role in turning Macau into the largest gambling hub in the world. They bring high-rollers from the mainland to the casinos and lend them money to play, a critical role in a market where money transfers and debt collection are restricted.

The International Union of Operating Engineers, a U.S.-based trade union that’s trying organize Wynn employees, called for greater transparency from casino companies in their dealings with junket operators.

“What should be troubling to investors in casino stocks is that casinos don’t disclose to the public what junkets they’re doing business with,” Jeffrey Fiedler, a union representative, said in an e-mail. Casino revenue could be affected if Dore has trouble raising money from lenders to provide credit for gamblers, he said.

“This lack of transparency makes it impossible right now for investors to adequately assess risk in Macau casinos,” he said. “If the shareholding public had better information then there may not be these confused market panics like what we saw this past week.”

(Corrects union's role in 10th paragraph.)
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