Macau Finds Casino Operators Can be Liable for Junket Partner Debt

On Wednesday, Macau’s Court of Final Appeal upheld a decision that found Wynn Resorts Macau jointly liable for $747,482 debt to a VIP, along with its junket partner, Dore Entertainment. Wynn isn’t satisfied with the outcome and Paulo Martins Chan, a former boss of the Gaming Inspection and Coordination Bureau (DICJ, for its Portuguese acronym), predicts that the decision will bring an end to junkets in Macau.

Wynn Responsible for Junket Actions

The ruling stems from an incident from 2015 when Mimi Chow, then a cage manager at the Wynn Macau’s VIP room, ran away with approximately $90 million in high-roller investments and deposits. The money was never recovered and Chow was never found.

Individuals who claimed that they had suffered financial losses filed lawsuits against Wynn Resorts Macau in the wake of the crime. The plaintiffs claimed Dore wasn’t paying and demanded restitution from Wynn. Only one of these claims was allowed to proceed because all the others couldn’t provide documentation to prove their losses.

Wynn claimed Dore was only a contractor and that it had no responsibility for the junket’s debts. Dore claimed that Chow solicited investments and deposits without the approval or support of the company.

Wynn previously found support from the court that Dore was liable. However, the 2018 ruling was reversed by an appellate court, which ruled that the casino license holder was jointly responsible for the debt.

Wynn issued an alert to investors in the wake of today’s decision. Wynn stated that while today’s ruling was finalized, it is seeking legal advice from its legal team in Macau.

Junkets Lose More Ground

The ruling will shake up the VIP segment of Macau. The junkets, historically, have been the primary source of rich gamblers to the high-stakes Baccarat tables. Their actions and activity were always treated differently from those of casino operators. However, if the operators can be held responsible for their actions, the reward no longer outweighs the risk.

The reliance on junkets already began to fade prior to this recent ruling. The number of active junkets serving Macau has been declining, from 190 in 2011 to less than 95 currently. The junkets are able to extend credit and often operate outside the normal financial channels, handling large amounts of cash, which doesn’t make regulators happy.

In Australia, the use of junkets has fallen out of fashion, as well. Crown Resorts said earlier this year that it was going to eliminate its relationship with the companies. The same is likely to be seen in Macau, especially if license holders are going to be held financially responsible for the actions of their partners.