Taiwan court upholds ruling on Melco Resorts’ US$41mln gaming debt claim

The Taiwan High Court on Tuesday upheld a first-instance ruling ordering a Taiwanese high roller to repay casino operator Melco Resorts & Entertainment Ltd approximately HKD320.47 million (US$40.9 million), plus annual default interest at 29.25 percent, in connection with a gaming debt incurred at a Macau property in 2020, according to Taiwan’s Chinese-language media reports. The property was not named in the reports. The Taiwanese high roller – a man surnamed Ku – had been a “VVIP” patron of Melco Resorts since 2018 and had a history of repaying his gaming debts on time, the reports said, citing the court’s decision. Melco Resorts contended that on May 17, 2020, Mr Ku received non-negotiable chips worth of HKD300 million – his approved credit limit – and subsequently lost the entire amount gambling. The casino firm said it had agreed at the time to his request to defer signing a credit slip, given his repayment history and his concern that signing the document on the spot would affect his “gambling luck”. Melco Resorts further contended that Mr Ku was entitled to HKD10.43 million in commissions and rebates at the time. After deducting this amount, his outstanding principal was about HKD289.57 million. Under the parties’ agreement, overdue balances attracted default interest at three times Macau’s statutory rate of 9.75 percent, equivalent to 29.25 percent. By April 9, 2021, Mr Ku’s outstanding principal and interest had reached nearly HKD320.47 million, with annual interest of 29.25 percent payable from April 10, 2021 until full repayment, per the reports. Mr Ku disputed the debt, alleging that documents submitted by Melco Resorts had been forged or altered, and challenged the authenticity and completeness of the casino footage. The Taiwan High Court examined the footage alongside employee testimony and immigration records, finding that he had received the chips and gambled in Macau on May 17, 2020, according to the reports. He also argued that providing chips rather than cash did not constitute a monetary loan. The court rejected that argument, finding that the parties had agreed he would draw cash credit and exchange it for chips of equivalent value, and that Melco Resorts was legally authorised to provide gaming credit in Macau. In a collegial panel ruling, the Taiwan High Court held that although the credit agreements referred to the jurisdiction of Macau courts, that jurisdiction was non-exclusive, allowing Melco Resorts to pursue the claim in Taiwan. Both parties had also agreed that the credit arrangements would be governed by Macau law. The court further held that Mr Ku was an adult who had knowingly obtained lawful gaming credit in Macau. As the loan was lawful there, the debt could not be deemed invalid on the grounds that it contravened Taiwan’s “public order or good morals”. The ruling remains subject to appeal, according to the reports.