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For Wynn, seeing $258m stolen from its Macau casino is not the worst of it

By NexChange
Capital Markets

Lady luck is not smiling on gaming giant Wynn Resorts. Last week it was uncovered that a reported $258 million was stolen from its Macau casino in what looks like an inside job. But this is not the worst part.

For a start, the money was not actually stolen from Wynn. The victim was a junket operating inside  the casino, Dore Group, which is said to have been ripped off by its own employees. In Macau junkets operate as third parties, bringing in cash for high rollers to use as leverage for their bets. Dore makes up a quarter of Wynn’s junket volume.

The details as to how much money was actually stolen are also murky, as this Barron’s report explains. The trust system that operates in the junket financial system means that the money was never actually on Dore’s books therefore does not represent a loss of liquidity. Gaming research firm Union Gaming meanwhile reports that police figure of $258 million could be overstated due to a misunderstanding over currency conversion.

But that doesn’t mean US-listed Wynn is not feeling the pain. The theft has triggered a massive 10% drop Wynn’s stock over the past week. That’s roughly $700 million wiped from its market value - a lot more than was pilfered from its partner's vaults.  

This is not the worst seen in the Las Vegas of the East. According to Business Insider, a $1.3 billion heist from the junket Kimren in April 2014 - which analysts call Macau's "Lehman Moment." - dealt the biggest blow to Macau’s high roller market.

But even without Asia’s Ocean Eleven smuggling out cash out of Wynn’s  front door, thing have been pretty lousy for Macau’s casino trade as a whole. Government figures show that revenues each month have been down 30% to 50% year-over-year. This is not just down to China's general economic slowdown, but also President Xi Jinping's anticorruption drive. China’s high rollers, it seems, just can’t stomach the risk anymore.

Photo: Derek Tam

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