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Donaco dumps its new junket operator

Donaco dumps its new junket operator

Donaco International Ltd has terminated its junket deal with Macau VIP gaming promoter Heng Sheng Group, saying the arrangement proved too restrictive for the marketing of its flagship Star Vegas Resort and Club in Poipet.

“[The] previously agreed deal with Heng Sheng has now been terminated. Operations were suspended from January 2016,” the ASX-listed casino operator said in a fiscal half-year earnings report yesterday.

Donaco completed its $360 million acquisition of Star Vegas last July. In August it entered a three-year contract with Hang Sheng Group to funnel high-rollers to the casino’s gaming floor and handle customer service.

Joey Lim, managing director of Donaco, told shareholders in November that the junket deal was off to a good start, and a swank new VIP gaming room at Star Vegas earned nearly $700,000 in its first full month of operation.

The company’s earnings report for the six months to December 31 also indicated strong growth of the casino’s VIP segment, with rolling chip turnover increasing 29 per cent compared to a year earlier.

Yet in January – just five months since inking its three-year deal with Hang Sheng – Donaco’s management terminated the contract, claiming it was hindering VIP traffic growth.

“Heng Sheng previously had exclusivity for certain countries and territories, preventing us from working with other junkets,” it said in the earnings report.

Donaco said negotiations with other international junkets were in advanced stages and new deals could result in a significant number of new players visiting Star Vegas in the coming months.

Most importantly, a potential deal with Thai junket operators could open the casino to cross-border VIP traffic – arguably a more natural fit than reliance on the distant Chinese market.

The company said it was considering options to expand its gaming floor into the adjoining 240-room Star Paradise Hotel to accommodate an expected surge in Thai VIP traffic.

In addition to the casino, Donaco operates the Aristo International Hotel in northern Vietnam near the Chinese border.

The company reported casino operating revenue of A$68.8 million (US$49.5 million) for the six months to December 31, with the Star Vegas contributing A$55.5 million and the Aristo recording A$13.4 million.

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