Union Gaming Research in Las Vegas says a court ruling in Hong Kong could boost the number of direct credit agreements between Macau casino operators and Asian high rollers.
Gambling debts are not legally enforceable via the courts in the People’s Republic of China, the jurisdiction from where many Macau high rollers originate. In Macau itself, the government has regulations (first developed in 2004) to register and regulate gambling credit agreements, but there is still some uncertainty as to whether such agreements are executable via the Macau courts.
VIPs with Hong Kong assets are thought to make up a significant proportion of the high limits players in Macau. If the casinos are able to advance them credit directly rather dealing with them via gambling agents, the operators can make a better margin on their play. Casinos are more likely to enter into such agreements if they are confident they can execute on the deals in the event of disputes or default.
That’s why a decision by Hong Kong’s High Court just before the Lunar New Year holiday over a HKD30 million gambling debt run up by VIP player Henry Mong Hengli to Wynn Macau is significant.
Justice Carlye Chu Fun-ling rejected Mr Mong’s defence that a credit agreement or marker signed by him was unenforceable.
Mr Mong’s lawyers in the groundbreaking case had argued that, among other issues, the credit agreement between Mong and Wynn did not receive advance approval from the Macau gaming regulator.
In 2004, Macau passed its first legislation on gaming credit, but to date Wynn appears to be the first casino operator to attempt to recoup debts through the courts in either Macau or Hong Kong.
“We believe this [Hong Kong] ruling is very important for operators in Macau as it relates to increased higher-margin direct VIP play. Prior to this ruling there was no means of enforcing gambling debts, which has limited the amount of direct credit extended to VIP customers. We suspect Macau operators will now become more comfortable issuing credit to their VIP players (at least to HK residents),” says Union Gaming in a note to investors.
