Inside Asian Gaming

May 2011 | INSIDE ASIAN GAMING 49 Feature invest their money to work for them and therefore must liquidate assets when they need cash. One other point is that if a patron is bank transferring funds from one country or currency to another they will incur hefty bank transfer fees as well as foreign currency conversion fees both on the outbound and return transfers. Many larger casinos often agree to pay these bank fees on behalf or the customer especially if he is a big player. These fees can range from 1% to 3% depending on where the funds are being transferred from. These fees can add up quickly. For example, $100,000 x 2% = $2,000. Therefore, the fees could potentially amount to $2,000 x 2 = $4,000 plus bank transfer fees which could be an additional $40 to $100 each way. A million dollar transfer could incur over $40,000 in bank transfer fees. Most players prefer to use casino credit to avoid these fees until such time as they lose and need to pay their markers. It is also aggravating and expensive for players to pay the high bank transfer fees if they win in the casino and want to transfer their winnings back to their home country. While in Singapore, I helped to developed a new program with Bank X where our VIP customers, primarily from Asia, opened personal investment accounts with Bank X that were then invested in various stock funds. Bank X would then allow these customers to borrow up to 80% of their investment portfolio and issue a cashier’s cheque to the casino. The customers can then settle any outstanding gaming debts by topping up their investment portfolio within an allotted time limit, otherwise Bank X would execute a pre-signed authorization form allowing it to settle the debt by transferring money from the customer’s investment portfolio to the casino. This was not an easy process to get approved and took months of review from both the compliance and legal departments at both Bank X and the casino that I worked for as well as regulators in Singapore. Both the casino and the bank maintained close control over this to ensure that all necessary ‘know your client’ (KYC) reviews and paperwork were properly completed. This concept, in effect, was innovative at the time, but still limited in scope for a number of reasons. One major reason was the volatility of stocks, which seemed to be a concern for several customers. Gold, on the other hand, has always been a fairly stable investment medium. Customers in Asia are very familiar with investing in gold. Many of the Asian banks offer gold denominated savings accounts. Gold and other precious metals are also universally accepted as collateral for loans through banks/financial institutions. This sparked my idea to use gold as collateral for casino credit by creating The Foxwoods Collateral Process where we allow a player who has opened an investment account with Gold Bullion International (“GBI” ; www.bullioninternational.com) to sign a document pledging up to 80% of his or her gold investment account value as collateral against any casino credit that Foxwoods will advance to that player. The investment account is easy for many international players to set up. It enables Foxwoods to grant credit to many international players that we would not otherwise feel comfortable granting credit to. That could be for a variety of reasons such as non-enforceability of gaming debts in their home countries, local currency control laws that prevent the free flow of funds out of their home country, and prior bad casino credit histories of “derogs” (derogatory information on non-payment of past casino credit). Over the past five years gold has appreciated in value and global investment demand for gold bullion is growing despite the current difficulty in buying and storing gold. One of the leading global facilitators of investments in gold is GBI. It has partnered with the best in class companies to provide a secure service where individuals investing in gold actually purchase and own the metal rather than a certificate of ownership. The actual gold bullion in the form of coins or bars is inventoried and stored in secure vaults around the world. All of the gold is insured by Lloyds’s of London 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.