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Reports have been streaming in of a heist at Macau Casino amounting to $258 million. This news has had catastrophic effects on the stock of Wynn Macau which has been tumbling since. A report published by Daiwa Capital Markets, an investment bank based in Hong Kong, says the heist involves Dore Holdings, the junket system operating within the hotel and casino.

Wynn Macau is a Las Vegas-style luxury resort owned by Wynn Resorts. When it opened officially on September 6, 2006, it was the first of its kind in Asia. The Resort offers gaming as well as restaurants, a hotel, retail shops, a “Performance Lake’ and spa. The Casino is open for 24 hours daily. The 280,000 square foot resort features 672 gaming machines and 462 table and poker games. Wynn Macau completed an expansion in December 2007 that saw it add more space for gaming, retail, and food and beverage shops.

Macau currently holds the title for the world’s largest gambling hub. The revenue collected through gambling has seen it surpass Las Vegas by five times. This success can be attributed to the junkets who provide many casinos with their VIP clients. Despite the large numbers of middle class Chinese that flood casinos in Macau, the VIP rooms remain the largest, most reliable source of money. These high rollers bring in up to 70% of the total revenue. The money from these rooms is controlled by the junket system operating within the casino.

Junkets, like banks, accept deposits and loan out money. However, unlike banks, junkets go the extra mile and arrange travel and accommodation for their clients in Macau. Within the casinos, junkets manage their VIP rooms and earn on a commission basis depending on how much their clients wager at the casino. The credit that junkets offer those arriving in Macau can provide a way around China’s limit on the amount of money people can leave the mainland with. The personal relationship between the VIP clients and junkets also makes it easier to enforce debts accrued through gambling since the laws China do not recognize the same.

Suspicion has been raised in the recent past concerning the channels through which this junket system raises its funding. Many believe this funding may have its roots within the underground lending market of China, which remains a grey area legally. However, this market is still key to the financing of China’s small and medium-sized businesses.

Reports on the heist claim that employees of Dore Holdings made away with the money. Investigations specifically point to a cage manager from Dore Holdings, according to Barron’s Asia. Dore maintains two VIP rooms within Wynn Macau that have a total of 25 tables. After news on the heist had stricken the public, Dore released a statement on their website admitting that one of their managers did, in fact, commit the heinous crime that has had a severe impact on the company’s reputation.

In a recent interview, Wynn told Boomerang it lost no money of its own during the heist though their stocks have been affected drastically. Reports from Card Player indicate that the stock has dropped by 10% since the news of the heist was first released on Thursday. Wynn, however, is not alone on this front as other companies with casinos in Macau have also been adversely affected by news of this heist. MGM Resorts dropped 1.9%, Las Vegas Sands (LVS) fell 2.8%, and Melco Crown Entertainment Ltd (MPEL) experienced the greatest drop among the three – 4.8%.

Despite the heist, Dore still manages its VIP rooms within Wynn Macau. However, there has been a decline in the revenue available on the island for gambling since the heist. People are reluctant to spend their money for fear of losing it. According to Daiwa, Wynn is still likely to face bad debt if Dore’s remaining capital is insufficient to absorb the loss caused by the heist. Moreover, with the uncertainty around how much loss Dore Holdings experienced, Wynn Macau may be required to step in and reimburse some of the losses.

Government figures over the past few years show a steady decline in Macau’s casino revenues from 30% to 50%. This can be attributed to the general economic status of China which is experiencing a slowdown. Another factor that contributes to this decline is the anti-corruption drive of the Chinese President Xi Jinping. There has been a decline in the number of people visiting Macau as many are fearful of participating in the gambling activities. High rollers, who are usually the most conspicuous consumers, are also affected greatly.

Another cause of this great decline is the previous heists that have rocked business in Macau casinos. Most common is the $1.3 billion heist in April 2014 that analysts termed “Macau’s ‘Lehman Brothers Moment’”. Huang Shan made away with $1.3 billion belonging to Kimren group, where he was a shareholder. To fully grasp the intensity of this loss, it is important to note that investors in most junkets earn a guaranteed return of up to 2%. However, Huang had managed to guarantee his investors a return of 2.5% that was previously unheard of in the business. After the heist, many investors pulled away, with others demanding more return for their risk. This crisis also affected other small listed junket firms such as Iao Kun Group Holding Company Limited, which dropped 20% after the $1.3 billion heist.

Cameron McKnight, an analyst with Wells Fargo, estimates a 33% decline in the gambling revenue of Macau as a whole. Given the prevailing conditions, many would agree with Rob Goldstein, Chief Operating Officer at Las Vegas Sands Corp, when he said that Macau’s junket system was broken. Surprisingly, though, the worst is yet to come.