LV Sands chief says Macau junket model broken

The VIP junket model that has been so good to Macau casinos for so long is now broken.

So says Rob Goldstein, president and chief operating officer of Las Vegas Sands Corp.

He should know. Sands China Ltd already operates more gaming tables in Macau than any other single concession holder within its properties Sands Cotai Central,  Venetian Macau and Sands Macao. If this isn’t a big enough exposure to Macau’s fortunes, they are currently building casino number four – The Parisian, which will include a half-scale model of the Eiffel Tower and come at a cost of US$2.7-billion.

Macau’s reversal of fortune this year has been dramatic.

source: dicj.gov.mo

How long the slump will last, or whether this is the new normal rather than a slump, is a question execs like Goldstein must be pondering a lot right now.

His take on the situation, when questioned at a Bank of America Merrill Lynch investor briefing during the week included the following insights:

Macau’s VIP junket model is broken.

“I don’t have a lot of confidence in the VIP [segment in Macau] because I think the junket model – for now – is broken,”

It will remain broken for the foreseeable future for many reasons.

“I can’t envision the VIP getting back to the full throttle of a year ago – and for numerous factors,” 

Those reasons being:

“the anti-money-laundering situation, money movement, economics,” 

Economics?

“The confidence of that level of consumer at the very high end, I think that is probably [the most] fragile of any of the [customer] segments, because of the real estate, the equities, the currency devaluation.  I don’t think anyone in China – no matter how rich or poor they may be – is unaffected by consumer confidence right now.”