Charity Begins at Home
Can casinos combat player poaching with greater handouts to players and agents?
An interesting question is can the Macau casinos afford to be more generous to their direct players and head off any player poaching by junkets.
The wiggle room of the casinos must be considerable if figures previously released by Las Vegas Sands Corp (LVS) are accurate. LVS said in June 2009 in a note to investors that its margin on direct high roller play in Macau was 1.0 to 1.2 times higher than the margin on players fed to it by junkets.
When LVS’s figure is meshed with other industry data, including an average 0.5% net hold to the casinos on VIP gross (after tax and expenses and after theoretical hold is smoothed out to account for baccarat return volatility), that would mean Macau casinos with direct players are achieving a net hold of 1.0% plus. In other words, they have up to 0.5% to play with as incentives to direct marketers and VIP players before they dip below the returns they can achieve by simply going the junket route.
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