What effect do casino robberies actually have?

Poker player pointing gunWhen you watch some of the glamorous casino heist movies – Ocean’s 11 is the obvious one – it all looks kind of good fun. The big greedy casinos get their comeuppance and the underdog criminals walk away with the loot.

Obviously things are a lot more complicated in real life, and it’s been interesting to observe the fall-out and after affects of a recent casino robbery in the gambling Mecca of Macau.

The robbery

Earlier in September 2015 it was reported that around HK$100 million (USD$13 million) had been stolen from a third-party operator within Wynn Macau. These third-party operators are common in Macau and are referred to locally as junkets. The junkets play a key role in Macau casinos, often supplying the cash that the VIP high rollers need to finance their betting. This type of facility is particularly important in Macau because the mainland Chinese gamblers (who are the biggest market for gambling in Macau) are restricted on how much cash they can carry with them.

The junket concerned is called Dore Holdings, and early indications are that an employee of Dore Holdings has made off with the cash.

The immediate impact

Although the theft happened within Wynn Macau, the casino itself didn’t lose any money. However, as soon as news of the robbery was released Wynn Macau’s stock value fell 9%.

Analysts are assuming that the drop in value of the Wynn Macau stock is related to investors factoring in a likely drop in the high-roller Chinese market – a further blow to an already shaky gambling economy in Macau.

The latest update

The profitability concerns are not just limited to the Wynn Macau – MGM, Wynn Entertainment, Las Vegas Sands, Melco Crown Entertainment, and SJM Holdings have all subsequently reported a drop in share value ranging from 2%-6%.

What analysts are also reporting is that the entire junket system in Macau has less cash available to it, so that means that less money is being made available to the high roller gamblers, which means that less money is being gambled in the casinos.

The bigger picture

After benefiting from phenomenal growth, the gambling industry in Macau is experiencing a marked slow down.

Gambling tourism from China has been the big driver of revenue in Macau’s casinos, but the economic slow-down in China is impacting this sector. In addition, the Chinese government has launched a major crackdown on corruption – monitoring expenditure and paying particular attention to easy to spot targets such as the high roller gamblers.

So are casino operators the victims here?

It’s clear that no matter how large or small, audacious or discreet, there are always consequences from crime. This latest theft from the junket in Macau hasn’t been the direct cause of the weaker casino economy in Macau, but it is part of the overall picture that is making investors in casino operators increasingly nervous as to what their returns are going to look like in the future.

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