U.S. casino operator Las Vegas Sands Corp reportedly announced that a subsidiary of Sands China Limited ended a partnership agreement with Macau’s three largest corporate clubs in December.
The Las Vegas-based giant has a nearly 70% stake in Sands China Limited and made the announcement as part of a document detailing its annual financial results, according to a report by GGRAsia. The Hong Kong-listed subsidiary was responsible for Venetian Macau, Plaza Macau, Paris Macau, London Macau and Sands Macau properties, net profit up 70.4% year-over-year to about $2.87 billion, resulting in a deficit of about 31% improvement to about $1.05 billion.
Las Vegas Sands Corp has reportedly declared it has canceled its contract with the three unnamed junkets due to the fact that a subsidiary of Sands China Limited has no guarantee that it will be able to “maintain or grow” its relationship with these companies in light of recent market changes. The parent company has also reportedly said that this uncertainty has expanded to whether “the gaming regulator will continue to obtain permission to operate in Macau,” potentially ‘affecting our business, financial position, operational results and cash flow.’
In addition, Las Vegas Sands Corporation has reportedly used documents to declare that the ‘quality of game promoters’ held by Macau’s sub-partners is ‘important’ to its overall reputation and ability to ‘continue to operate in compliance with our game licenses’. Sands China Limited’s move reportedly follows similar decisions by fellow casino operators Melco Resorts and Entertainment Limited, Galaxy Entertainment Group Limited and Win Macau Limited of Win Resort Limited.
“While we are trying to achieve excellence in our relationship with game promoters, we cannot guarantee that the game promoters involved will meet the high standards we claim. If game promoters fail to meet their financial obligations, there is no guarantee that we may not result in financial exposure.”
The junket companies in Macau are said to promote partner casinos to wealthy foreign gamblers while receiving commissions to handle VIP’s travel, accommodation, banking and credit demands. However, the number of such licensed companies recently hit a record low of just 46, with the expectation that a bill would prevent local gambling companies from engaging in profit-sharing transactions with outside companies.