Imperial Pacific Reports Massive 2018 Loss Amid VIP Gaming Challenges

Saipan-based casino operator Imperial Pacific International (IPI) posted a net loss of nearly US$378 million in 2018, driven by declining revenue and uncollectable VIP gambling debts. Earlier warnings to investors confirmed the company’s expectation of a significant net loss, and the final figure of HK$2.97 billion represented a sharp reversal from the HK$637 million profit recorded in 2017.

The loss was attributed to several key factors, including distractions caused by the 2018 FIFA World Cup, tighter marker credits, and a temporary shutdown of Saipan’s only airport due to Typhoon Yutu. IPI’s total revenue dropped 58.2% year-on-year to HK$3.25 billion, with VIP gaming revenue plummeting over 60% to HK$2.9 billion. Although the VIP win rate improved slightly to 3.7%, it was insufficient to offset the decline in turnover, which fell by nearly two-thirds compared to 2017.

Mass market gaming also underperformed, with table drop declining 28.7% to HK$660.5 million and mass table win down one-third to HK$208.9 million. Slot and electronic table games saw a minor uptick in handle but revenue still fell 16% to HK$56.3 million. IPI’s VIP-focused strategy revealed its vulnerability, as nearly HK$1.27 billion of total gaming revenue in 2018 came from a single external customer, highlighting the outsized impact of high-rollers on the bottom line.

Trade receivables, primarily gambling debts owed by VIP clients, remained substantial at nearly HK$9.7 billion, down from HK$13.3 billion at the end of 2017. IPI considers approximately HK$4.7 billion of these debts uncollectable, a figure slightly below the prior year’s HK$4.75 billion write-off. The top ten debtors accounted for HK$1.9 billion, with the largest owing HK$657 million alone.

The company acknowledged that net current liabilities of HK$4.75 billion “indicate the existence of a material uncertainty which may cast significant doubt on the Group’s ability to continue as a going concern.” However, agreements with lenders to extend repayment schedules and the addition of HK$1.15 billion in unsecured credit facilities have helped mitigate immediate financial pressures.

Construction of IPI’s permanent venue, the Imperial Pacific Resort, remains ongoing due to a labor shortage. The company confirmed securing sufficient labor from the Philippines and Taiwan to continue building and meet operational needs. The focus on high-value VIP clients, combined with strategic operational adjustments, is expected to guide IPI’s recovery and stabilize its market position.