VIP market to get more intense says Iao Kun

Junket operator Iao Kun said it expects Macau’s already highly competitive VIP gaming promotion business to get even more intense as numerous new projects, which are currently under construction or development, are due to open beginning in the second quarter of 2015.

In an annual report, the company said its VIP rooms are located at five out of 35 casinos in Macau and compete with around 180 other gaming promoters in Macau.

 “Any opening of additional casinos and hotels is likely to result in a significant increase in the number of VIP gaming rooms, intensifying competition in Macau’s VIP gaming business and among VIP gaming promoters.”

The company said there is also growing competition as new markets emerge in the region

“We also face current and prospective competition from casinos and gaming promoters located elsewhere in Asia, particularly since many countries have loosened visa restrictions on Chinese visitors. Such casinos include Genting Highlands, a major gaming and resort destination located outside of Kuala Lumpur in Malaysia, and other casinos located in the Philippines and Singapore.”

The company’s VIP revenue decreased to $233.8 million in 2014 from $236.8 million the year before while losses amounted to $60.1 million on net income in 2014.

The company said its narrowly focused operations leave it highly exposed to certain risks.

“Our operations are currently conducted at five VIP gaming rooms in five casinos in Macau that are primarily focused on VIP baccarat. Therefore, we are subject to greater risks than other gaming promoters with more VIP gaming rooms at different geographic locations. For the years ended December 31, 2012 , 2013 and 2014 revenue contributed by our largest VIP Gaming Room, accounted for 53.5%, 38.6% and 37.3% of our total revenue, respectively.”