Inside Asian Gaming

INSIDE ASIAN GAMING | Oct 2007 20 Galaxy Expansion I dropped in on the recent Euromoney Seminars’ Gaming Asia Pacific Summit at the Macau Tower, just to see if the usual talking heads were there offering their re- hashed presentations about Asia’s tremen- dous potential to sleepy audiences more interested in the networking coffee breaks and cocktails than the content of any of the talks in between. Yup, the usual suspects were sure there, but something caught my attention just as I was about to leave.There was a new speaker presenting, and he was not a gaming opera- tor or a consultant looking to get work from the gaming operators, or even a fund analyst trying to spin some stock he’d somehow got stuck with a large chunk of. He was, by golly, a junket operator! Yes, they do exist, and more impor- tantly, this one actually said something very interesting. Usually in this type of public setting, most speakers get away with saying very little of anything new, but this most elusive of all public speakers somehow let some- thing slip. A member of the audience took the rare opportunity to ask the junket op- erator point blank what the actual maxi- mum rate of commission offered by the casinos was. After all, none of the casinos would publicly concede their maximum rate, for fear of being accused of con- tributing to the inexorable rise in junket commission rates. The junket operator naturally attempt- ed to evade the question, but in doing so, he inadvertently made an even more momentous revelation, admitting the ex- istence of side-betting (or the multiplier). It’s too bad for him he didn’t just directly address the question posed, as he himself answered it the following day in the South China Morning Post in a media release, which said his company was seeking to raise funds and would be getting 1.35% from a Taipa-based casino. A tangential connection? To veer off on a bit of a tangent, has anyone noticed the recent flurry of junket operators seeking to raise huge sums in fi- nancing, and more interestingly, the number of bankers and financiers looking to lend to them, or better still, invest money in junket activities? As explained in my previous columns, the junket operators always have sub-jun- kets under them—a pyramid scheme pipe- line so to speak, that keeps the rooms filled with players.Each level, in turn, has to depos- it specified sums of money with the casino, to both act as collateral, in case their players lose, and to “buy” the non-negotiable chips that their players will roll. The funds thus accumulated have always been sufficient to satisfy the casino opera- tors, up until now. So why the sudden rush to get funds? House of Cards Casino marketing columnist Octo Chang looks at the possible explanations for the recent fund-raising flurries by Macau’s junket operators