Inside Asian Gaming

INSIDE ASIAN GAMING | December 2008 34 In Focus easily come to Macau and gamble,” explains the insider. Many junkets make a point of keeping detailed information on valued VIP customers—including their favourite 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 themon a plane,everything is taken care of,”he adds. Recruitment of the Chinese high roller is a wasted effort though without the ability to organise credit for their gambling trip. “If you look at the Macau gaming revenue [last year] of US$10 billion, clearly that’s a very big amount. But does it mean people are bringing US$10 million 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 cheque 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 a maximum of US$5,000, or about 40,000 renminbi out of China at a time.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 the agents, know who they can provide credit to? Clearly they don’t—especially the Western casinos. Knowledge is power “The Western operators are very good at building a fancy casino, but they don’t know the customer. So they have to rely on the junkets. Some of the casinos have tried to go direct by having their own high roller programme to some of their mass hall customers. But even when the casinos have their ‘own’ in-house VIP room as it were, they need those VIPs that can bring in money as a deposit,” explains the source. This effectively rules out most potential VIP customers from Mainland China. “If the person says ‘I’m rich but I can’t bring in any money to deposit’, the casino will say ‘That’s too bad. We want to serve you, but we can’t serve you if you can’t make a deposit.’ The casino may have to refer them to the junket anyway.The junket is able to take care of all these problems,” states the insider. Paying up Just as VIP recruitment is pointless without credit collection, so the profitability of the whole system hinges on the ability of the agents to collect debts. As gambling debts are not recognised as a legally binding contract in China, such debts cannot be enforced via the courts there. It’s up to the agents to ensure players honour their credit. “The casinos in Macau essentially extend the credit to the junket operators.The casinos don’t want to touch the credit or the debt collection issue directly,” says the source. “It would be difficult for them to go through their local gambling compliance procedures in the US or to follow the relevant anti money-laundering policies,so they want to outsource it to the junket operators.” “The junket operators really know their customers and have this very good network of local people in China. If you as a player lose money, you’ll be given a certain amount of time to pay up, and if you don’t, the local representatives are going to follow you wherever you go until you do. That’s much more effective than the casino operator trying to chase the debt itself, long distance,” says the insider. “I’m not going to go into details of how exactly they collect, but they’re definitely more effective.”