Inside Asian Gaming

INSIDE ASIAN GAMING | February 2012 20 used to. Now, this Western influence is coming back in the form of Chinese players. What’s funny is that we think everything is invented here and we export it. Now, a lot of this is starting over there and it’s coming over here. Really, it is the globalisation of gaming, and unless you’ve been to both places you don’t realise that it’s here and that it’s happening fast.” Perhaps no Strip casino knows this better than Bellagio, where baccarat drop has doubled since Sands Macau broke the mould not quite a decade ago. “I would call it incremental growth,” says Vice President of Table Games Bill Bingham. “I know that since Macau started offering Western-style casinos it has provided a pipeline.” The casinos that want the action are aggressive in pursuing it, motivated by Nevada’s low tax rate of 6.75% of gross revenue. Macau has the advantage of location, but their Vegas competition get to keep more of what they win, which gives them more leeway to offer incentives to entice this select group of players to come halfway across the world—players who might be expected to lose US$10 million on a single visit. There are discounts on losses and/or straight cash rebates. These are determined by the size of the bankroll the player is prepared to risk, their credit- worthiness, their betting volume, and other factors, and usually these are negotiated up front. Discounts on losses are just what they sound like and can run as high as 20%or 30%. Rebates are reimbursements: lose $1 million, for example, get $200,000 cash back at the end of the trip. Then, of course, there are the luxury accommodations and gourmet food and drink, gifts, travel expenses, maybe a casino jet to pick you up and take you home, and more, like invitation-only tournaments, often with six-figure prizes, no entry fees or buy-ins required. Marketing and player development are managed almost entirely in-house through offices in the key Far Eastern locations— “meeting the players, wining and dining them,” says Mr Bingham. “It all comes down to personal relationships.” On the down side, there are no junket networks to negotiate the preliminaries and extend credit. The risks are the casinos’ alone. “It’s a completely different business here than in Macau,” Mr Bingham says, which makes it a “very, very tricky business,” in his words, and an expensive one. “It’s not like any one of us has a lock on these players. They move around, and it’s not uncommon for them to come here for a few days, play here, play at Wynn, at the Sands properties; the competition has definitely heated up, and so the incentives it takes to get them here have definitely increased, and at some point, that does hit your margins.” Tomake it work, the casinos carefully rate a player’s value in terms of theoretical win, which is calculated on the basis of the time they spend at the tables and the size of their bets, which are agreed upon up front and govern the decisions regarding discounts, rebates and comps. “It’s very scientific and very reliable if you do it right,” says Mr Bingham. Promotional chips, or “bonus” or “casino action chips,” as they’re sometimes called, are another popular tool. They’ve been employed for years in Las Vegas at all levels of play. Similar to Macau-style “dead chips” in that they’re non-negotiable, they function as a rebate, except this is front-end money instead of back-end. In exchange for a $500,000 cash deposit in the cage, say, the player will get $10,000 in non-negotiable chips to play with, with the understanding that more can be had, but they must be played through until they’re gone. Credit is the most challenging part of the equation and requires a thorough vetting of bank accounts and credit history and informational networks such as Central Credit Services, an international industry data base. Assets in accounts outside of mainland China are taken into consideration. Operators also swap references and experiences. “Most of the Las Vegas operators have it figured out,” says Mr Pirosch. “They’re generally not using credit as a marketing tool.” It’s one of the areas where a presence Feature Pulling out the stops—the Bellagio Conservatory (left) and Palazzo atrium (right), decked out ahead of Chinese NewYear Vegas experience—depiction of high roller baccarat at Bellagio