Macau Casinos Decline After Report on Junket Crackdown

Wynn Macau Ltd. slumped the most in more than a year in Hong Kong trading, leading declines among Macau casino companies after the U.K.’s Times said China plans to crack down on junket operators.

The Hong Kong-listed unit of billionaire Steve Wynn’s Las Vegas-based company plunged 6.8 percent to HK$19.44 in Hong Kong, the biggest drop since October 2011. SJM Holdings Ltd., Asia’s biggest listed gambling company by sales, retreated 6.4 percent. The four other Macau casino operators also fell.

China’s government will start taking action this month to clamp down on junket operators that bring gamblers from the mainland to Macau, the Times reported on its website, citing unidentified people in law enforcement. By acting as middlemen and moneylenders, junket operators help drive the high-stakes, or VIP, business estimated to account for about two-thirds of casino revenue in the world’s largest gambling hub.

“The report is rather speculative -- we don’t think that’s happening right now,” said Grant Govertsen, a Macau-based analyst at Union Gaming Research. “Beijing’s liaison office in Macau had said measures against corruption in the mainland are a completely different matter. There would not be any changes in policy on Macau.”

Press representatives at the Hong Kong and Macao Affairs Office of The State Council in Beijing didn’t respond to five phone calls seeking comment on the Times report.

Junket Reports

The action will involve police operations in six Chinese cities and is part of an anti-corruption campaign led by Xi Jinping, the Communist Party general secretary, the U.K. newspaper reported.

MGM China Holdings Ltd. dropped 0.3 percent, Galaxy Entertainment Group Ltd. fell 5.4 percent, billionaire Sheldon Adelson’s Sands China Ltd. fell 5.2 percent and Melco Crown Entertainment Ltd. was down 5 percent.

Spokeswomen at Sands China, Wynn Macau and MGM China declined to comment and calls made to SJM, Melco Crown and Galaxy weren’t answered.

Macau casino stocks fell Dec. 4 after the Wall Street Journal reported that police in mainland China and Macau had detained people from at least three of the biggest junket operators in earlier weeks.

Casino industry revenue in the gambling hub climbed 14 percent to a record 304 billion patacas ($38 billion) last year. Operators are building new resorts on the city’s Cotai strip to draw more gamblers. Sands China posted a 52 percent jump in fourth-quarter profit by pulling in visitors to its newest resort.