Wynn poaches Sands' top VIP agent
Vegas casino mogul stokes competition by raising junket operators' commission to draw players to its new Macau resort
Las Vegas casino magnate Stephen Wynn, whose US$1.2 billion Macau casino resort opened this week, has poached a VIP junket operator from one of his rivals and raised marketing agents' commissions as he moves to grab a share of the enclave's high-stakes gaming market, sources say.
Veteran Malaysian junket operator Phua Wei Seng had worked in Macau exclusively for the Sands casino. His eight high rollers' tables in the private Shanghai Room accounted for about 36 per cent of Sands' US$12.84 billion in VIP chip turnover in the year to March.
Mr Phua for now will deliver high rollers to both casinos. He is also a licensed junket agent for Australia's Burswood casino and Malaysia's Genting Highlands. His Macau junket permit is up for renewal on December 31.
Mr Wynn is seeking to build a stake in Macau's HK$28 billion market for VIP baccarat in competition with former monopoly holder Stanley Ho Hung-sun, United States gaming magnate Sheldon Adelson and Hong-Kong-listed Galaxy Entertainment Group, run by the family of Lui Che-woo.
Key to the market are agents - among whom Mr Phua is a top performer - who lure in high rollers and lend them money to gamble while earning commissions on the value of the special VIP chips that their customers buy from the casino.
Wynn Resorts (Macau) was putting pressure on rivals to raise agents' base commissions by offering 1.2 per cent of VIP chip turnover, compared with the 1.1 per cent base rate at the Sands, Mr Adelson said in an interview last week.
Sands was likely to increase its commission payments, he said.
'We can't have our business taken away,' Mr Adelson said. '[Wynn] is forcing us to raise our commission. But right now our commission is the same as Stanley Ho's.'
Higher commissions squeeze profit margins for the house. Even so, 'if worse came to worse, we'd have to reduce our profit at the high end and just be more aggressive on the mass market', Mr Adelson said.
Casino operators' profit margins on mass market play are wider and more resilient because no middlemen are involved.
In the VIP market, an increase of 0.1 per cent to junket commissions - paid on the gross volume of chip purchases - can translate to a decrease in net earnings of several percentage points for the house.
Shares in locally listed Teem Foundation Group, which said in April it would pay HK$539 million for an indirect minority interest in the profit generated by Mr Phua's junket business at the Sands, have been suspended from trading since August 29.
The suspension was pending an announcement of the new deal with Wynn Resorts, market sources said. Spokesmen for Wynn Resorts declined to comment. Teem executives did not return calls.
As of yesterday, Macau had 136 licensed junket operators, according to the territory's Gaming Inspection and Co-ordination Bureau. Of those, 20 are affiliated with the Las Vegas Sands group and three with Wynn Resorts. In addition, eight junket licences are pending approval, seven of which would be attached to the Sands.