Las Vegas Sands Corp, which is spending between US$11 billion and US$14 billion building a dozen casino resorts in Macau over the next three years, said record volumes from high-stakes casino play during the first quarter failed to offset rising commissions paid to VIP gaming junkets in Macau.
Turnover of VIP gaming chips at the Sands surged 85 per cent from a year earlier to a record US$6.86 billion. At the same time the casino paid a higher commission rate on those chip sales to junket agents, who bring in high rollers, lend them money and collect gambling debts.
'Our results at the Sands were burdened by approximately US$12 million of expenses principally for labour costs and junket commissions that were incurred to position us against new competition and to ensure a smooth opening of the new Venetian Macao this summer,' president and chief operating officer William Weidner said.
The squeeze resulted in the casino's first year-on-year decline in profit since it opened in May 2004, as margins fell to their lowest levels in three years.
First-quarter profit fell 3.6 per cent from a year earlier to US$90.56 million.
Increasing competition is shaving already-thin profit margins in Macau's booming VIP gaming segment, in which revenue surged 50 per cent to HK$11.65 billion in the first quarter and accounted for 65 per cent of total gaming revenues in the territory.
While casino operators are feeling the squeeze to varying extents, the effect is even more acute for so-called VIP room operators.