Inside Asian Gaming

Oct 2007 | INSIDE ASIAN GAMING 13 V IP Rooms are oft mentioned in news reports about gaming revenue in Macau. But do people really know what goes on inside them? What are the ar- rangements? Can theWestern mindset com- prehend the market and break the relation- ship between the Junket Agents and their players? Let’s start off with some basics.What is a Macau VIP Room? In its simplest form, the Macau VIP Room is a private room where all the action and transactions taking place within—except for the table games operations, which are run by the casino licensee—are coordinated and ‘owned’ by the VIP Room Operator. According to a couple of research ar- ticles, the origins of the Macau VIP room lie either in the ferry ticket touts/triads or a Pai Gow table operator from Manila, who went on to open the first VIP Room in Macau (the Diamond VIP Room at Casino Lisboa). Before setting up shop in Macau, the Diamond VIP Room operator ran a private Pai Gow table within a PAGCOR (the Philippine govern- ment monopoly casino operator) casino, and shared the revenue with PAGCOR in an arrangement which some argue is a forerun- ner of the VIP Room model characteristic of Macau during Stanley Ho’s monopoly, and still prevalent in SJM casinos. Whatever its origins, the VIP Room has evolved into what is today a symbiotic and highly specialised marketing operation that exists not side by side but within the host gaming operation, to provide a pipeline of customers who not only have the propensity to gamble, but also the means. The VIP Room does this in a manner that hides the darker side of these operations, particularly regarding the extension and col- lection of credit, and helps the casino opera- tor disavow knowledge of the source of the funds or what happens when the players fail to pay their debts. Ownership So who owns theVIP Rooms? If the room is part of the SJM or Galaxy stable, then the physical room is owned by either SJM, Gal- axy or the owners of the casino property in which the room sits. The owner of the building leases the room with or without interior decorations to the VIP Room Opera- tor (who we shall henceforth refer to as the ‘Operator’), who in turn must be licensed by the government. Examples of privately owned properties (read non-SJM) are the Waldo, Rio, President and Grand Waldo of the Galaxy City Clubs, and the Grand Em- peror, Greek Mythology, Diamond at Holi- day Inn and Casa Real of the SJM chain. The VIP rooms in these casinos are leased as empty shells for monthly leases upwards of HKD$200,000 depending on size, location, quality of hotel etc. Then you have the VIP rooms that per- mit individuals to come in and operate from them with no monthly leases but with very high turnover targets, such as Sands’ Paiza Suites, Wynn’s ground floor VIP Room and the new Starworld higher floors (refer to my previous article,‘A Junket Primer’in the Janu- ary 2007 issue of Inside Asian Gaming). The VIP room usually has its own Junket Cage or Cashier counter, where a set or sets of chips unique to that room are used. Usu- ally, all the staff except the umbrella table operations and security personnel are em- ployed by the Operator. Staff The staff employed by the Operator con- sist predominantly of the PR (Public Rela- tions) Officers and Junket Cashiers. You can easily tell them apart from the casino staff, as the former are usually adorned in 2 piece suits of unusually bright colour (pink, yel- low, blue, pinstriped etc) and tend towards young good looking Chinese females for the PR officers (who perform the function of ‘rolling’ the chips between the players and the Cage), and middle aged ladies for the cage. The VIP Room managers will be much more mature and may be either male or fe- male. The Junket cage manager is usually a different individual who is a long-serving, loyal and trusted employee, and who more often than not has a direct reporting line to the Operator independent to that of the Room Manager. Above the Managers sits the General Manager or the Owner’s Representative, who is the primary liaison for all the different Junket Operators who bring their clients to that particular room. On the other side of the coin, the VIP Rooms in casinos in Las Vegas and Australia are a direct extension of the casinos them- selves—i.e. all the staff and action within are directly controlled by the casino. Long Live the Middle Man Casino marketing columnist Octo Chang details the workings of Macau’s VIP Rooms, and explains how attempts by new foreign casino operators to move upmarket and cut out junket agents have thus far proved futile VIP Rooms in Focus Grand Lisboa VIP Launge Grand Lisboa VIP Room