Inside Asian Gaming

INSIDE ASIAN GAMING | May 2011 48 C asinos around the world issue billions of dollars in credit every year. Foxwoods Resort Casino—the largest casino resort in North America, where I work as Vice President of Casino Marketing—is one of the larger issuers of casino credit. As much as casinos claim their credit involves minimum risk, there is obviously always risk. A player can default for several reasons: his financial situation changes quickly, he is no longer liquid, he owes too many other casinos money and may decide to pay them first, especially if he plays at their properties more regularly than at your casino, etc. The other issue is fraud, which is more common in international casino credit transactions where decisions are not as structured as we would like and are often based purely on a player’s past record of “play and pay” at other casinos. Unfortunately, I have been on many collection trips where the player’s home address turned out to be a cemetery or an empty lot, or where the player threatened me with bodily harm. Casino collections can be dangerous in some countries, especially in those where casino debts are not recognized legally and, therefore, are also not legally enforceable for collection proceedings. What can casinos do to better protect themselves from credit risks? Depending on the regulations of the jurisdiction they are based in, there may be some new creative options worth considering. We hear a lot about the innovative concept of ‘reverse mortgages’ as a way for individuals above a certain age to remain in their own homes during rough financial times, basically borrowing against the equity that they have built up in their homes, which they pledge as collateral to a lender. The individuals live in their homes until their demise, with the lenders knowing they will eventually take ownership of the homes. This concept inspired me to start thinking outside of the box on the issue of casino credit. One approach was to think like a consumer rather than a casino operator and try to develop a new approach to casino credit that benefited all parties. I also studied private banks to get a better understanding of how they developed relationships with their best customers. After meeting over a dozen top private banks during my last job in Singapore, I decided to work with a major international private bank at that time that I will refer to as Bank X. Bank X is one of the market leaders in Asia, especially in private banking, and also seemed to be fairly aggressive with its marketing. The first task was to educate Bank X as to why customers would rather use casino credit than bring cash to gamble or transfer bank funds in advance of their gaming trips. It is both difficult and dangerous to carry large amounts of cash around the world, especially with today’s strict reporting requirements. As for the danger of theft, I remember a trip to Moscow several years back where an Asian gentleman on my flight was seen declaring about US $35,000 in cash at airport customs in a fairly visible procedure. I later noticed that same gentleman checking into my hotel. About an hour later, I became concerned when I saw that the hotel lobby was full of police. I asked what had happened and the hotel staff told me that an Asian guest had been robbed and killed in his room. It was the same person from my flight. My guess is that someone ‘fingered’ him at the airport and followed him back to the hotel. The second reason why players prefer to use casino credit is that they do not have to liquidate assets to wire transfer money in advance of a gaming trip. Even though many high-rollers are rich, they do not keep large amounts of money in the bank. They Risk-Free Casino Credit By Steve Karoul Feature