MGM China On The Hook For $36 Million Junket Holdings
![MGM China faces having to pay almost $36 million to customers who deposited funds with junket operators working for the casino.](https://www.internetpokies.org/app/uploads/2022/03/62dfa1bcbce33dd9-1-1.jpg)
Investors in MGM China are reeling after a recent court decision leaves the casino on the hook for HK$202.7 million ($35.94 million). That is the sum gamblers deposited via MGM-linked junkets, money requiring repayment.
MGM China and Wynn Macau received some bad news in November 2021. Macau’s Court of Final Appeal decided Macau license holders are financially responsible for some of the junkets’ actions. The decision follows legal cases dating back to 2015. This is when Mimi Chow stole HK$$700 million ($124.12 million) from a junket operating at Wynn Macau.
The casino employed Chow as a cage manager for the junket’s private VIP room. However, she betrayed their trust and absconded with the huge sum of money. Nobody knows where Chow is. In addition, the money remains missing.
Vultures are circling following the court ruling that Macau casinos are responsible for junkets’ debt. Three civil cases linked to MGM China and junkets are at the forefront of this latest saga. VIP players from all three cases depositing funds with a pair of junkets but withdrawing proved impossible. Junkets seem untouchable so they went after MGM China.
MGM China Pays Out $33.14 Million in One Case
One of the three cases is done and dusted. The Macau Court of Final Appeal ruled against MGM China and forced it to pay HK$117 million ($20.73 million). In addition, it owes HK$80 million ($14.17 million) in interest.
Losing the first case makes MGM China unlikely to win the other two yet-to-be-heard cases. It estimates it is on the hook for HK$202.7 million ($35.93 million). A statement to the Hong Kong Stock Exchange said the chance of recovering the money MGM China paid is “remote.”
Indeed, MGM has the opportunity to sue the junkets and recover its losses. However, they are more likely to hit all 20 Keno numbers than that happening.
The $34.9 million already paid nor the potential $35.93 million payouts appear on the latest MGM China financial statements.
Company Reports Its 2021 Annual Results
This negative news came on the back of MGM China reporting its 2021 annual results. Macau suffered badly and continues suffering because of the COVID-19 pandemic. Visitation to Macau increased by 31% to 7.7 million people, but that number is 80% lower than 2019. The signs of recovery are there but it is a long way from returning to normality.
MGM China’s revenue increased 85% to HK$9.4 billion ($1.66 billion). Its daily gross gaming revenue weighed in at HK$29 million ($5.14 million), which is 40% of pre-pandemic levels.
Kenneth Feng acts as President, Strategic & Chief Financial Officer for MGM China. Feng is optimistic about Macau’s continuing recovery.
“The recent constructive developments during the process of retendering reaffirm our confidence in Macau Government’s judicious and fair approach to the process. Macau is an important part of our future and we will continue to work with the government on retendering.
“We remain cautiously optimistic towards a market recovery. We are going to see not just repeat customers, but new faces especially in the premium mass segment. We understand what our customers want and MGM China is well-positioned for the market’s eventual rebound. As a corporate citizen in Macau for 20 years, we have a high conviction in the future success of this region. We look forward to further investing and promoting the long-term development of Macau and supporting the government’s tourism and diversification goals for the region.”
Shares Trading At A 52-Week Low
Having a huge payout hanging over its head does not sit well with MGM China investors. Shares fell to HK$4.00, some 10.38%, to a 52-week low after the news broke. Those shares recovered slightly to HK$4.06 but are a far cry from the 52-week high of HK$14.62.
Macau casinos have massive earning potential but need customers through their doors. Investors are hopeful those customers will be more plentiful in the coming months.