Macau casinos face growing bad debts as VIP punters step back

Wed May 18, 2016 3:41am EDT
 
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By Farah Master

Macau (Reuters) - Casinos in Macau face a growing volume of bad debt provisions, further hitting earnings in the world's largest gambling hub at a time when high-roller VIP punters are backing off.

China's slowing economy and a pervasive campaign against graft has sapped demand from wealthy gamblers and prompted operators in the southern Chinese territory to shift their focus to lower spend mom and pop gamblers.

As more and more rich Chinese steer clear of Macau's baccarat tables, revenues from the VIP sector have shrunk to around half of total revenue from over 70 percent at the start of 2014.

The bad debt provisions, which have more than doubled in 2015 and are seen growing further due to tightening regulation, are now adding to the pressure on the industry to adjust.

Macau's new gaming regulator, Paulo Martins Chan, said the government was auditing junkets, middle men employed by casinos to lure big whale gamblers, to assess the size of their bad debts. Authorities also plan to establish a central credit database to minimize credit risk.

Chan, appointed in November 2015, told a Macau Gaming conference on Wednesday that in addition to diversifying, the city needed to improve its image.

"We will continue to further strengthen and refine our laws and regulations and to improve the overall quality rather than quantity of the gaming industry," Chan said, without providing details.

While helpful in the long-term, stricter rules could pinch.   Continued...

 
A woman walks in front of a casino at Studio City in Macau, China, October 27, 2015. REUTERS/Tyrone Siu/File photo