Following the arrest of embattled Suncity Group Holdings (1383. HK) company’s CEO, the firm immediately proceeded to halt the entire of its VIP room in Macau, the globe’s largest gambling hub, based on two sources with firsthand knowledge of the situation.
According to one of the individuals, a senior Suncity Group Holdings executive who declined to be identified since the closure hasn’t been publicly disclosed, the shutdown of Suncity Group Holdings VIP room will results in a reduction of a about a third of the firm’s Macau staff.
A request for a comment from the Suncity Group wasn’t returned. The company’s stock was banned from trading for the second time in three days on Wednesday, pending the release of announcement by the company pertaining to its VIP business.
Suncity Group stated in a statement late Wednesday that its CEO, Alvin Chau has resigned from all of his responsibilities at the firm. In addition, the company also issued a statement saying that it has filed to the Hong Kong Stock Exchange to restart trading on Thursday.
The announcement comes as part of a larger probe against Chau, who arrested on Sunday for alleged cross-border gambling, along with money laundering connections. Chau is also the creator of Macau’s largest junket company, which transports high0rollers to casinos.
The efforts of Reuters to reach Chau or his lawyers haven’t been successful. On Tuesday, Suncity Group’s stocked plunged to a record low 48%, valuing it at HK$880 million ($113 million).
Mainland Chinese and Macau authorities are taking stringent measures to curb gambling in mainland China, where it is outlawed. This is a game-changing move for the industry. They are also attempting to ban the movement of Chinese gambling-related revenues into Macau and other regions, which China labeled a national security danger last year.
The shutdown of Suncity Group’s gaming rooms has further added to the misery for Macau-listed casino stocks, which have significantly fallen this week due to the predicted loss of business from Chau’s junket company, which accounts for roughly a quartile of Macau’s gaming reserves.
Wynn Macau Ltd (1128. HK), which analysts say is the casino operator most reliant on Suncity Group’s gaming rooms, has been struck particularly hard, falling 8% on Wednesday, bringing this week’s losses to 18%. Wynn Resorts Ltd (WYNN.O), the company’s parent in the United States, has seen less of a drop, with shares down to 5% on Monday and Tuesday.
Bloomberry Resorts Corp (BLOOM.PS), one of the most popular casino locations outside Macau for Chinese gamblers in the Philippines, was down 10% on Wednesday. On November 18, 2015, a logo bearing the image of Macau junket operator, Suncity Group was seen at a gaming fair in Macau, China.
Authorities in Macau have charged Chau and ten others with exploiting the former Portuguese colony as a location for illicit “live web betting business” in the Philippines that drew gamblers from mainland China.
On Friday, Wenzhou —Chinese mainland city— issued a warrant for the arrest of Chau, alleging him of organizing a junket agent network that assists residents in gambling operations along with establishing a corporation that aids gamblers in making cross-border financial transfers.
“The writing was already on the wall. In Macau, however, nothing was done until the Wenzhou police raised the issue,” said the executive.
While Chau’s junket activities, also known as Suncity, aren’t affiliated with the publicly traded Suncity Group, in the past, they’ve been singled out by mainland China’s state-run media, which claimed they were harming the social order of the country.
According to a 2019 report that was published by the Economic Information Daily, a division of China’s state news agency Xinhua, the annual online betting on Suncity-owned websites totaled above 1 trillion yuan ($155 billion). Suncity has likewise failed to react to a request for comment regarding that figure.
Suncity operated VIP rooms in facilities controlled by all 6 of Macau’s licensed casino operators, including Wynn Macau, Sands China (1928. HK), MGM China (2282.HK), SJM Holdings (0880.HK), Melco Resorts, and Galaxy Entertainment (0027. HK).
The executive also stated that Suncity operated up to 17 VIP gaming rooms in Macau in 2019, accounting for over half of the gambling epicenter’s VIP market.
Suncity’s operations have been suspended in MGM Resorts International’s (MGM.N) facilities, and there was no significant impact as a result of the action taken. MGM stock was down 2.5 percent in the afternoon trading.
In an email sent to Reuters, Melco Resorts said that Suncity had halted operations at its City of Dreams and Studio City resorts. The Suncity junket rooms in Wynn Macau and Wynn Palace were shut off at midnight on December 1st, according to Wynn.
Requests for response from the other casino operators have gone unanswered.Macau Suncity Group Holdings