Suncity closes VIP gaming halls in Macau after arrest of CEO, sources told Reuters

By Farah Master and Eduardo Baptista

HONG KONG (Reuters) – Conflicting gaming group Suncity Group Holdings has closed all gaming rooms in Macau, the world’s largest gaming site, after the company’s CEO was arrested, two sources with direct news of the situation told Reuters.

The closure of the company’s VIP lounges will lead to a one-third reduction in Macau’s staff, one source said, with the closure not publicly announced by a casino chief executive.

The Suncity Group did not respond to a request for comment. Its shares were suspended on trading for the second time in three days on Wednesday until a forecast related to its VIP business was published.

The news comes amid an extensive investigation into Suncity CEO Alvin Chau, who was arrested Sunday with cross-border gambling and an alleged link to money laundering. Chau is also the founder of Macau’s largest junket operator, which brings in big rollers to play in casinos.

Marking the evolution of the sector, the authorities are taking a zero tolerance approach to the promotion of gambling in mainland China, where it is illegal, and want to maintain the flow of Chinese funds related to gambling to Macau and other gambling sites – outlets. China last year saw it as a national security threat.

The closure of Suncity’s gaming halls has exacerbated the pain in Macau’s casino stock, which is expected to account for about a quarter of Macau’s gaming revenue this week due to the expected loss in Chau’s junket business.

He shares Wynn Macau (OTC 🙂 Ltd, which analysts say is the most trusted casino operator in Suncity’s gaming halls, has been very tough, slipping 8% on Wednesday to bring this week’s losses to 18%.

Wynn Resorts (NASDAQ 🙂 Ltd’s U.S. parent-facing decline was smoother as its shares fell 5% on Monday and Tuesday.

Outside of Macau, Bloomberry Resorts Corp., a popular casino destination for Chinese players in the Philippines, fell 10% on Wednesday.

Macau authorities have accused Chau and 10 others of using the former Portuguese colony as the basis for an illegal “web betting platform” that attracted players from mainland China.

Chau was also issued an arrest warrant on Friday in the Chinese city of Wenzhou on charges of forming a network of junket agents to help citizens participate in gambling activities and of creating a company to help gamblers transfer cross-border funds.

“The writing was already on the wall. But nothing was done in Macau until Wenzhou police talked about it,” the executive said.

Although Chau’s junket operations, also known as Suncity, are not part of the listed Suncity Group, they have previously been highlighted by mainland China state media, which have said they have damaged China’s social order.

An article in the 2019 economic news daily of the Chinese state news agency Xinhua said that the annual number of online bets on websites managed by Suncity was more than one trillion yuan ($ 155 billion). Suncity also did not respond to a request for comment on the estimate.

One source told Reuters that Suncity operated VIP rooms owned by six licensed casino operators in Macau – Wynn Macau, Sands China (OTC :), MGM China (OTC :), SJM Holdings (OTC :), Melco Resorts and Galaxy Entertainment.

In 2019, Suncity operated 17 VIP gaming rooms in Macau and accounted for nearly half of the gaming center’s VIP market, the executive added.

Melco Resorts said in an email to Reuters that Suncity had ceased operations at its City of Dreams and Studio City stations.

Wynn said in a statement that the Suncity junket rooms at Wynn Macau and Wynn Palace were suspended for operations at midnight on Dec. 1.

The other four casino operators did not respond to requests for comment.

The Suncity Group said this week that Chauk intended to resign. Reuters’ efforts to contact Chau or his lawyer have been unsuccessful. Shares of the Suncity Group fell 48% on Tuesday to a record low of HK $ 880 million ($ 113 million).