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Macau’s highest court has declared casino operator Wynn Macau is culpable for player losses resulting from a heist at the now-defunct Dore junket, delivering a new body blow to the flailing VIP segment.
The Court of Final Appeal on Friday dismissed Wynn Macau’s appeal against a lower court ruling that found it jointly liable with Dore after the latter failed to return HK$6m ($770,000) in funds to a VIP player following the 2015 incident, Wynn Macau told the Hong Kong Stock Exchange on Wednesday.
The Court of Final Appeal also ordered Wynn Macau and Dore to jointly pay interest and costs of HK$3.65m to the player.
The heist, allegedly perpetrated by a senior Dore cage official and reported in September 2015, resulted in the loss of some HK$700m ($90m), although informal investors in the junket have claimed the loss was much larger.
Although Wynn Macau must pay out at least $619,000 in the case, the fallout damage to the junket-casino operator nexus could be more profound, further corroding the heavily diminished earning power of the once-titanic VIP segment.
The ruling dismantles a key protective wall between junket losses and risk for host casinos, and exposes casino operators to an “unprecedented and materially adverse impact”, according to António Lobo Vilela, a former advisor to the secretary for economy and finance and author of the book series Macau Gaming Law.
Lobo Vilela told VIXIO GamblingCompliance on Wednesday that the court’s decision opens the door for litigation against casino operators in disputes over “all funds on deposit with all and every gaming promoter”.
“This may be an endgame for all gaming operators,” he said.
It could get worse if junkets go bankrupt and leave operators with major debts or if foreign regulators frown on subsidiaries in Macau that can no longer operate at a legal arm’s length from junkets, Lobo Vilela argued earlier this year in the Gaming Law Review journal.
The court’s ruling “will reshape forever the relationship between casino operators and gaming promoters, finally understanding that the latent financial risks could eventually outweigh the perceived profitability of VIP gaming”, he wrote.
Lobo Vilela predicted that even if casinos continue to host junkets and allow independent cages, operators will now need to greatly enhance oversight of these operations, and “be more specific in drafting the gaming promotion contracts … to include indemnity clauses against illegal activities”, as well as other guarantees.
The plaintiff in the current case was the only one of four original litigants able to provide documentation of an account with Dore, with the initial, lower court decision finding that Dore alone should cover that player’s missing funds.
The first appeal court confirmed the payout, but ruled that Wynn Macau should be jointly liable.
The Dore heist, which triggered protests by angry junket investors outside Wynn Macau’s casino and — embarrassingly for the Macau government — at China’s Liaison Office, was a key trigger for regulatory reform for the junket sector.
The heist came only months after a much larger sum of cash and debt, totalling in excess of $1bn and generated by a Ponzi scheme-style side betting structure, was allegedly stolen by Huang Shan, an official with the now-defunct Kimren junket.
Huang escaped Macau and fled to Southeast Asia before being tracked down and detained by a rival junket in Vietnam, leaving behind fiscal and reputational wreckage in Macau's gaming sector that the Dore case would only exacerbate.
It was not immediately clear if Friday’s ruling will encourage new gambler litigation against lawbreaking junkets such as Dore and Kimren, but Lobo Vilela told VIXIO that Macau’s “default statute of limitations is 20 years”.
