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Macau junket operator disappears with $1.3 billion owed to MGM (and 3 others)

Discussion in 'Casino Industry & Development' started by donfairplay, May 1, 2014.

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  1. donfairplay

    donfairplay Low-Roller

    Feb 12, 2013
    Trips to Las Vegas:
    This story just broke in the WSJ. Pretty crazy, I hadn't heard of the Macau junket operator industry, apparently its a $30 billion industry run by 220 people (well, 220 licensed operators).

    Mods, although it doesn't count as a Las Vegas casino specifically, we have threads about MGM/CET developments in other parts of the USA.

    Google the title to read the whole WSJ article:
    Junket Figure's Disappearance Shakes Macau's Gambling Industry

    Huang Shan Is Believed to Owe Up to $1.3 Billion, Leaving Investors Struggling to Get Their Money Back

    May 1, 2014 3:32 p.m. ET

    The disappearance of a Macau junket figure believed to owe up to 10 billion Hong Kong dollars ($1.3 billion) is roiling the world's largest casino market and putting a spotlight on the opaque network of middle men who drive nearly two-thirds of the Chinese territory's gambling revenue.

    Unlike other gambling hubs like Las Vegas, Macau depends on junkets for many of its customers. These companies bring high-spending gamblers to the casinos from mainland China, issue them credit and collect players' debts in exchange for commissions. The system took root there because the Chinese government imposes restrictions on how much cash its citizens can take out of the mainland and because gambling debts aren't considered valid inside China.

    Huang Shan, a junket operator active in Macau's gambling industry for around four years, disappeared sometime last month, according to several senior casino and junket industry executives investigating the matter. Mr. Huang's disappearance leaves investors struggling to recoup up to $1.3 billion, they said.

    Mr. Huang had developed a large business by offering investors payouts of 2.5% a month, higher than the industry standard of 1% to 2%, said some of the executives. Junkets operate much like banks, taking cash from investors and lending it out to gamblers. Many investors agree to fund that lending in return for fixed monthly dividends.
    The junket company that Mr. Huang was affiliated with—Macau's Kimren Group—operated at four casinos: SJM Holdings Ltd.'s Grand Lisboa, Galaxy Entertainment Group Ltd.'s StarWorld, Melco Crown Entertainment Ltd.'s Altira and MGM Resorts International's MGM Macau.
  2. BackInVegas

    BackInVegas VIP Whale

    Mar 14, 2008
    Trips to Las Vegas:
    That is pretty interesting. Going to have to read up on that and contact some folks I know in Singapore.
  3. Kickin

    Kickin Flea

    Aug 10, 2012
    So much of the business there is controlled by junket operators and all of the ones I've seen look like they walked straight out of an Asian gangster movie. Yakuza or Triads or something.

    We were part of a syndicate several years ago making a debt investment to one of the major operators in Macau. Their execs took us all around their casinos and in every single room there was some big baccarat players and standing nearby were their junket operators. Maybe lower level guys keeping an eye on things. They were young and totally slicked out with tight dark and shiny suits, dark sunglasses, pointy shoes, slick hair. You couldn't have imagined a more stereotypical looking gangster if you tried.
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