The Court of Final Appeal has ruled against gaming operators Wynn Macau and MGM China in several court cases claiming joint liability compensation for lost deposits either due to the Dore incident or in VIP rooms of the now-shuttered Suncity junket operator.
The decision involved a total of nine cases received by the court between January and February concerning the deposit of gaming chips in junket operators with business relations with gaming concessions, of which eight cases involve Dore Entretenimento Sociedade Unipessoal Limitada and Wynn Resorts (Macau) S.A. while one involved Sun City Game Promotion – Sociedade Unipessoal Limitada (Suncity) and concessionaire MGM Grand Paradise, S.A.
MGM Grand Paradise, S.A. and Wynn Resorts (Macau) S.A. are two official entities holding concession license holders, linked to MGM China and Wynn Macau.
Several lawsuits were brought against Wynn by individuals who claimed to be investors or persons with credit in accounts maintained by Dore Entertainment, an independent, Macau registered and licensed company that operated a gaming promoter business at Wynn Macau.
The plaintiffs alleged that Dore failed to honour the withdrawal of funds deposited with the junket after a former employee absconded with almost HK$700 million (US$89.1 million) in 2015.
In November 2021, the Court of Final Appeal had already considered Wynn Macau as jointly liable alongside junket operator Dore Entertainment Co. Ltd for the repayment of deposits stolen by a former employee of this junket.
Pursuant to the ruling, Wynn Macau was required to pay approximately US$1.2 million, inclusive of accumulated interest, to the plaintiff.
In its ruling, the TUI decided to join the decision concerning the Wynn Macau/ Dore and MGM/ Suncity cases in one sole decision.
“With the authorization and consent of Wynn and MGM, Dore and Sun City became casino gaming promoters operating with the aforementioned gaming concessionaires, having created VIP lounges at Wynn and MGM, respectively, and offering, through such VIP lounges, the services of depositing and withdrawing game chips to their members,’ the court decision read.
“The plaintiffs of the nine cases mentioned above were all members of the VIP lounges of Dore or Suncity, and had deposited, in VIP lounges live game chips in amounts between HK$1 million and HK$6 million.
The court then states that when the plaintiffs wanted to withdraw their respective gaming chips, Dore or Sun City rejected the intended withdrawal, so they filed lawsuits with the Court of First Instance (TJB) asking that Dore and Wynn or Sun City and MGM jointly refund the deposited live chips or equivalent amounts and the respective legal interest.
The first court ruled that in five of the said cases the gambling concessionaires allowed gambling promoters to carry out activities in their casinos, so they were jointly and severally liable toward third parties for the obligations resulting from the activity carried out by their gambling promoters, a decision later seconded by the Court of Second Instance (TSI).
The TJB had dismissed two other cases because the facts that the plaintiffs had deposited gaming chops had not been established, however, after considering the evidence the TSI decided to also condemn the concessionaires and junkets to assume joint liability for the restitution to the plaintiffs of the deposited chips or amounts equivalents.
In the two remaining cases, the TJB judged the actions partially valid, condemning the gambling promoters to return the deposited chips or equivalent amounts to the authors, but absolving the gambling concessionaires of the request.
Both cases were then presented to the TSI, which upheld one of the appeals, condemning the concessionaire and the gambling promoter to assume joint liability but acquitting the gaming operator in the other.
All nine cases were pushed to the Court of Final Appeal, which decided to rule junekts and gaming operators shared liability in all of them.
According to the court the 2002 law on gambling promotion activities imposes joint liability of the concessionaire vis-à-vis third parties for the activity of its gaming promoters carried.
“It would not be logical that the development of the activities included in the gaming concession could be carried out for the benefit of the concessionaire by other entities contracted for this purpose, without resulting in any liability for the damage caused by the activity that these same entities could cause,” the top court considered
“Consequently, the Collective Court ruled that gaming concessionaires are jointly and severally liable towards third parties for the obligations resulting from the activity carried out by their gaming promoters”.
Wynn Macau CEO Craig Billings had recently stated that the group was not expecting any “material exposure at this time” from these other lawsuits associated with the Dore case.
Amendments proposed to the local gaming law and junket operations are currently under evaluation by the Legislative Assembly, clarify that gaming concessionaires are jointly and severally liable not just for their gaming promotion activities, but also for members of administrative organs, employees, and collaborators of their gaming promoters arising from carrying out gaming promotion activities in their casino.
The bill also provides criminal penalties for junkets who “illegally accept deposits from the public, with offenders facing up to five years in prison.
Deposits with a Macau casino, via the respective VIP host or a junket, should still be legitimate as long as the deposit funds involved are used only for gambling.
In its 2021 annual report, MGM China indicated a decision on the case targeting the group and Suncity was announced by the top court in February, and that given the ‘gaming promoter’s inability to honour its financial obligation as ordered by the Court, the group will need to make the payment directly to the plaintiffs of the principal amount of HK$80 million, plus HK$37 million in interest as of the end of last year.
The now extinct Suncity junket was greatly impacted by the arrest of its founder, Alvin Chau Cheok Wa, in November, 2021 on suspicion of facilitating illegal gambling overseas for Chinese customers, with all of the junket brand’s VIP rooms in Macau closed and the company disbanded shortly after.
“Upon payment to the plaintiffs, the Group shall be entitled to claim from the
gaming promoter the reimbursement, in all or in part, of the amount paid, in a separate lawsuit, to be filed by the Group against the gaming promoter,’ MGM added.
“In light of the recent developments impacting the gaming promoter’s activities, it is predicted that the chance to recover the loss suffered through the payments to be
made by the Group is remote”.
In total, MGM China revealed it was liable for as much as HK$202.7 million (US$25.9 million) regarding cash deposits individuals respectively claim were placed with gambling junkets that had been working with the casino company.
The group has been named as a defendant in three civil cases relating to cash allegedly placed with an aggregate of two junket operators.
