Inside Asian Gaming

April 2016 inside asian gaming 21 In Focus that has for many years generated around three-quarters of Macau’s gross gaming revenue. Triads created the VIP room system. In 1970 when Stanley Ho’s Sociedade de Turismo e Diversoes de Macau (STDM) opened the Casino Lisboa under a monopoly concession from the Macau government, gamblers flocked to see the largest hotel-casino in Asia. Ferry tickets became scarce at crowded piers either side of the Pearl River Delta. That created an opportunity for organized scalping. Obviously this was not good for either the ferry operator or casino, both of which were owned by STDM. So Stanley Ho hit on an idea to co-opt the scalpers. His solution of allowing the triads into his casino to sell “dead chips” (chips that cannot be cashed-in and are initially given as loans to customers) still forms the basis of the VIP room system. Under the arrangement, a dead chip dealer bought dead chips from the casino at a 0.7% discount before selling them at face value to a gambler he befriended. The gambler would eventually replace the dead chips with regular cash chips he won. At this point, the dead chip dealer offered to exchange his cash chips for more dead chips. Generally the gamblers would agree for the sake of the relationship and because it made no difference to the gambler. “Chip rolling,” as the process is called, is still the basic revenue measure VIP rooms use for tax and commission accounting. Competition to find gamblers in Macau pushed triads and their associates into expanding overseas to recruit customers in the 1980s. In effect they became marketing agents for STDM, laying on transport to Macau and hospitality for gamblers at their own expense. To compensate them Stanley Ho made a second innovation. That was to allow them to set up VIP rooms; essentially their own private mini-casinos inside his properties, with a larger share of the total take. In the 1990s Portugal started winding down its control of Macau ahead of the territory’s return to China. Governance became weak and the police corrupted. Open war erupted for control of the lucrative junket trade, with murders carried out on the city’s busiest streets in broad daylight. Lo says the business in the decade “was effectively run and self-regulated by triads.” For those who would dispute this, it’s hard to imagine how non-criminals might have stayed in the game. But after China regained sovereignty in 1999 the triads dropped out of view. Macau now has one of the lowest rates of violent crime in the world. “I have been here more than seven years. I heard a story about a body hung up in front of the police department when I first Competition to find gamblers in Macau pushed triads and their associates into expanding overseas to recruit customers in the 1980s. In effect they became marketing agents for STDM, laying on transport to Macau and hospitality for gamblers at their own expense. The notorious Wan Kuok Koi : leader of Macau’s 14K triad society, he was jailed for 14 years in 1999.