Inside Asian Gaming

INSIDE ASIAN GAMING | May 2011 16 prepared to believe that there is a lot of stuff going on.” Inside Asian Gaming does not claim to be better placed than the US Department of State’s observers, but in an attempt to better gauge the scale of side-betting, we talked to several casino and junket contacts, and ‘impartial’ analysts and industry sources, promising all of them strict anonymity. None denied the existence of side-betting, but the top end of estimates provided by what we believe to be the most reliable sources was that side-betting accounted for at most 10% of reported VIP revenue. Of course, our estimate of the scale of side-betting is as unsubstantiated as the 100-times-greater estimate offered in the International Narcotics Control Strategy Report. Our sources did offer some common sense observations and supporting anecdotes to support their assertions, however. There is a relatively large number of VIP players around Macau who regularly bet the maximum of around US$125,000- 250,000 per hand of baccarat. Common sense would dictate even Asia’s biggest whales do not have the appetite to bet several times such amounts per hand for six hours or more a day for several days. Then there’s the question of volatility. If side-betting were equivalent to several times the reported revenue figure, one unlucky month at the hand of a few big players betting at a ten times multiple would likely break the bank of all but the biggest junket operators (who would be effectively running parallel casinos several times the size of the publicly-listed ones they operate inside). Side-betting would also likely multiply junkets’ bad debt issues. Whereas players commonly lose US$5-10 million on trips to Macau, there are only a handful of players in the world who could handle gambling debts of US$50-100 million Side-betting also multiplies the potential gains from cheating the junkets, as well as the potential shares offered to accomplices among the casinos’ or junkets’ staff. In the Autumn of 2009, four men were convicted by a Hong Kong jury of a conspiracy to commit bodily harm and a fifth of soliciting murder. According to court records, the men had, at first, been ordered to break the arms and legs of a dealer at a Macau casino suspected of helping a player cheat millions of dollars from a junket. Later, a call went out to murder the dealer, but then one of the men baulked and reported the plans to authorities. IAG ’s sources suggest the cheating in question was carried out by a player who was side-betting. Assuming for a moment that Macau’s junkets are indeed operating massive parallel casinos, and can stomach the inherent volatility and collect their debts, they would be earning enormous tax-free revenues (even while giving some back as higher commissions to players). In that case, they must be a lot more powerful than they appear. It could lend credence to the idea that they are capable of moving and concealing huge sums of money. That sounds like the makings of a great conspiracy theory. There is a relatively large number of VIP players around Macau who regularly bet the maximum of around US$125,000-250,000 per hand of baccarat. Common sense would dictate even Asia’s biggest whales do not have the appetite to bet several times such amounts per hand for six hours or more a day for several days. The Macau side-betting maxim illustrated Macau Side-Betting