Suncity Group, Macau’s largest junket casino operator, revealed plans for further expansion into the Asian gambling market, looking to transform itself into a worthy competitor to big players in the industry like Wynn Resorts Ltd. and Las Vegas Sands Corporation. Following its investment in a Vietnam casino resort that is expected to open in 2019, the junket casino operator announced it is now in search of potential partners in Japan. The operator’s expansion plans involve buying stakes in other gambling resorts and contract bids allowing it to manage other casinos.
The plans to deviate from the junket sector were announced by the Executive Director of Suncity Group Holdings Ltd., Andrew Lo, who explained that the junket operator would be able to attract more customers and maintain their interest if it runs its own casino resorts. The Executive Director also stressed that presently Suncity is the largest junket operator on the territory of Macau and as such, is in control of half of the junket market there.
Suncity’s Growth is Expected to Continue
Suncity’s Executive Director expressed his confidence that the company will continue to enjoy further growth over the course of the following six months as the economic and real-estate conditions in China have improved significantly. According to Lo, the regulations introduced in Macau over the last two years have also played a considerable role in the growth of the junket sector. Lo went on to say that the number of the overall bets made at Suncity is expected to grow by over 30% this year, despite the two typhoons that devastated Macau this past August.
Despite that, some gambling operators have expressed concerns that China’s attempts to reduce the outflow of capital may potentially have a negative impact on their revenue. Both government officials and private citizens are using Macau as an exit for their funds which has prompted the People’s Bank of China to introduce stricter measures to control the outflow of money leaving the country.
Even more so, following Bloomberg agency’s reports that over $816 billion has left China as of 2016. This resulted in the country’s government announcing it would restrict or altogether ban China-based companies from investing in specific overseas sectors, such as real estate, entertainment, and casino gambling.
Suncity is Looking to Penetrate the Market in Japan
These restrictions are expected to prompt many Macau companies and gambling operators to leave the local market in search of better conditions. Presently Japan appears to be the most preferred market by casino operators, which can be explained with the recent steps it has taken towards regulating its gambling sector. The country is expected to introduce its gambling legislation by the end of 2017. Once this happens, the gambling operators will be allowed to offer their services legally in Japan, with forecasts indicating that revenue from landbased casino resorts may reach $25 billion per year.
Suncity aims at obtaining a Japanese license for the construction of a $10 billion casino resort, part of a consortium, despite the fact the first gambling venues in the country are expected to open doors no sooner than the 2020 Olympics that are to be held in Tokyo. Lo revealed Suncity is interested in owning a smaller stake ranging between 10% and 20% and discussions on potential partnerships within the hotel and retails sectors have already commenced.
Japan is hardly the only Asian market Suncity is looking to expand into. The junket operator announced it has teamed up with the Hong Kong-based company Chow Tai Fook Enterprises and Vietnam’s VinaCapital Investment Management Ltd. in order to build and open an integrated resort in Hoi An. The costs for the venture are estimated to be $4 billion, with Suncity owning as much as 34% of the project.
Lo concluded by explaining Suncity’s ambitious expansion plans will enable the company to attract business on behalf of players, residing outside of China. The expansion should not be interpreted as an attempt to altogether leave the Macau market, he stressed, but should be viewed as an upgrade to meet the increasing demands of clients.
