Inside Asian Gaming

October 2012 | INSIDE ASIAN GAMING 25 In Focus are the big factory owners, they know the business people, they know what business they’re in, and by knowing them they have a way to help these ‘customers’ to come to Macau and gamble. “Because advertising of gambling is clearly prohibited in China, the junkets provide an important network,” he adds. He also says the network of VIP clubs is growing within mainland China. They have many of the luxury facilities found on the VIP floors of Macau casinos—with the crucial difference that there are no gaming tables or machines, and no gambling is permitted. Quality Service “Some of the junkets have VIP clubs in China and these are very often multipurpose entertainment centers,” explains the insider. “Typically they have Internet facilities, they have massage facilities, and they have theatres. In China nowadays, these VIP clubs or entertainment centers are increasingly becoming a form of competition to the hotels. “The hotels are inmany cases getting less and less business because at the VIP clubs you can stay overnight—it’s much cheaper than a hotel. You can have a massage, you can get food, you can watch movies, you can get online—you can get everything you need. In every town in China, the VIP entertainment industry is booming. “Many of the junkets actually have their service center at these clubs, as a way to acquire VIP customers. They issue them with membership cards, and they also have affiliates—organizations in different casinos in Macau or the Philippines or other Asian gaming jurisdictions. Comprehensive Service “Once these rich people in China become a member of one of these clubs, then transport can be organized so that they can easily come to Macau and gamble,” explains the insider. Many junkets make a point of keeping detailed information on valued VIP customers—including their favorite food and what sort of music or films they like. “It’s all about detail,” says the source. “Attention to detail covers transport, accommodation, catering, entertainment. So from acquiring the customer in China to sending them on a plane, everything is taken care of,” he adds. Recruitment of the Chinese high roller is a wasted effort, though, without the ability to organize credit for their gambling trip. “If you look at theMacaugaming revenue [last year of US$33.5 billion], clearly that’s a very big amount. But does it mean people are bringing millions in cash at a time into Macau? No. Most of that money does not come through the border,” says the source. Oiling the Wheels “The junket operators provide this key service of facilitating the flow of funds. A lot of times these big customers don’t have to bring in money at all. If they are on the ‘who’s who’ list in their locality they can get the credit. Sometimes they have to sign something, sometimes they may have to provide a symbolic deposit in the form of a check or provide some kind of asset collateral in China. Then they can come over to Macau without bringing any cash. In fact, I believe you can only take out of China at one time, at most, up to the foreign currency equivalent of US$5,000 and about 20,000 yuan ($1 = 6.27 yuan). That’s not very much money. For VIP players that’s not enough for even one game. I’ve seen these VIP guys gambling HK$10 million per night. They don’t have that in cash. They just use their credit line from China to get the money to play,” says the insider. As everyone in Macau knows, for historical reasons the casinos themselves don’t act as credit providers. “There can be problems with lack of information on players. In China, information on an individual’s credit worthiness isn’t available. So how can the casinos, or even