SJM and Galaxy keep junket-run VIP rooms

Macau casino operator SJM (0880) said it will continue its VIP gaming rooms run by junkets until the contract ends as they are not operated by Suncity Group (1383) unlike its US counterparts, according to local media reports.

Galaxy Entertainment Group (0027) will also keep on running some of its VIP rooms run by operators other than Suncity, Macau's biggest junket operator, but the business was obviously hit by the arrest of its chief executive Alvin Chau Cheuk-wa, the reports said.

Chau was arrested late last month on allegations of establishing overseas gambling platforms and carrying out illegal virtual betting activities.

The current wave of VIP room closures mainly involve gaming operators whose parents are listed in the US due to compliance issues, the reports said, adding that the market expects MGM China (2282), which is still under review, to follow the move of other US-owned gaming companies and shut down its VIP business run by junkets.

Earlier this week, Wynn Macau(1128), Melco International Development (0200) and Sands China (1928) reportedly decided to close VIP gambling rooms run by junkets this month.

Macau's Gaming Inspection and Coordination Bureau has ordered the operators, who bring big-spending clients from mainland China to VIP rooms in Macau casinos, often supplying them with loans to gamble with, to stop offering credit, Bernstein said in a research note on Monday.

SJM previously said the VIP business had been shrinking in recent years as the market had changed, but believed that mass market business will recover gradually in the future and the gaming industry will also grow in a healthy way.

Meanwhile, trading in shares of Chau's Suncity Group (1383) and its unit Summit Ascent (0102) were suspended yesterday.

Suncity shares were halted pending an announcement "in relation to a possible loan default by an associate of the controlling shareholder of the company and possible enforcement of securities charged," it said in a statement.

Earlier this month, Chau's junket operations closed all of its VIP gambling rooms in Macau in the wake of his arrest.

Stock performances of six major gaming operators in Macau were mixed yesterday - SJM dropped 1.26 percent to HK$5.5 while Sands China rose 2.8 percent to HK$19.5.