Wynn Resorts Liable for Junket Debt: Macau Court Watershed Ruling

Posted on: November 24, 2021, 10:34h. 

Last updated on: November 24, 2021, 01:53h.

Macau’s Court of Final Appeal on Wednesday upheld a ruling that found Wynn Resorts Macau jointly liable with a junket operator, Dore Entertainment, for a HK$6 million (US$747,482) debt to a VIP player.

Wynn Macau
Paulo Martins Chan, former DICJ chief, at a press conference prior to quitting the post last year. He believes today’s ruling will disrupt Macau’s junket model. (Image: Macau Business)

Experts expect the ruling to have far-reaching implications for Macau’s casino industry and its relationship with the junket sector.

The case dates to 2015, when Mimi Chow, then a cage manager for the junket’s private VIP room at the Wynn Macau, absconded with around HK$700 million ($US 90 million) in high-roller deposits and investments. Her whereabouts remain unknown, and the money has never been recovered.

Chow Still at Large

In the aftermath of the crime, several lawsuits were brought against Wynn Resorts Macau by individuals who claimed they had lost money. The plaintiffs said Dore was not paying up and sought restitution from Wynn.

Of these claims, just one, for $HK6 million was permitted to proceed, because the others could not provide documentation that proved their losses.

Wynn argued Dore was merely a contractor, and it had no responsibility towards the junket’s debts. Meanwhile, Dore claimed Chow acted for herself when she solicited the deposits and investments without the knowledge or backing of the company.

The court agreed with Wynn that Dore was liable. But that ruling was overturned in 2018 when an appellate court determined the casino license holder had joint responsibility for the debt.

In the wake of today’s ruling, Wynn issued an investor alert. It said while the ruling was final, it was seeking legal advice from its counsel in Macau.

The ruling will shake the foundations of the VIP segment in Macau. The junkets have long been the lifeblood of the segment, luring wealthy whales to play at the high-stakes baccarat tables. But their affairs have always been treated separately from those of operators.

How Junkets Work in Macau

Typically, junket clients pay money upfront via bank transfer prior to their trip. This buys them credit in the form of non-negotiable “rolling chips” at a casino VIP room. It also allows Chinese players to dodge the strict controls on the movement of large amounts of money out of China.

Operators usually pay their junket partners a monthly commission, provided the gamblers they bring can hit a minimum guaranteed turnover. The junkets will then settle with clients once they return home.

But if Macau’s license holders are now financially responsible for some of the actions of the junkets, they may have to rethink the model.

“If the license is yours, the problem is yours,” Paulo Martins Chan, former head of the Macau gambling regulator DICJ, told Macau Business.

“You have to find a way to control, according to the contract between the junket and the concessionaire [casino licensee]. So, if one day, the court decides that the concessionaire is also responsible, the gaming operator will have to be more careful when selecting the junket, or they’ll have to manage VIP gaming by themselves,” he added.

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