Sands Faces Probe

Posted: April 5, 2010 in Uncategorized

Extracts of The Business Times Weekend, April 3 -4, 2010  Singapore Press

Commentary by:  Professional Ground Panel

IS THERE A DIRECT PREMIUM MARKET IN ASIA?   

Go for the big whales and direct premium players! This was initially the idealistic concept of Las Vegas Sands when they first set foot in Asia, on the Special Administrative Region – Macau.

After a couple of years in operation, to date the Paiza Club (a well known VIP gaming element of Sands China) is no different from what other Asian casinos; i.e. it is still the base camp of the Junkets “Mount Everest”.  Main transactions of VIP turnover are basically driven by Junket operators (syndicated groups) at the Paiza Club. Not by the idealistic Direct Premium players (including the whales, if any). 

The most recent case reported in Las Vegas and the Business Times Weekend about the story of Sands Macau local partner linked with triads and murder case was believed to be only tip of the iceberg. 

Why Junkets remain the major influence of VIP gaming scene?  Is there a direct premium players market in Asia that casinos could tap on and to avoid pitfalls of triads involvement? The answer is yes and no.

Yes, becos there is still such a segment scattered around to be tapped. However, the real numbers of this segment has dwindled down much for the past two decades in Asia.  This market segment has become so insignificant that it is just a nice-to-have thing but no longer a promising key business driver.  At best it remains an impressive but hollow slogan for casinos to boast to analysts and media about “5 plane-loads of 747s on the way…”.   A realistic answer to that question is a NO. To stay in this (direct premium) playing field, a casino has to bear greater risk in credit exposure and collection.  That is the reason for Macau that, at the end of the day casinos (including Sands’ Paiza Club) still prefer to park credit & collection risks to Junket syndicates. In particular under the high gaming tax regime (at 40%).  In essence, casinos are NOT in the position to drive for high volume non-negotiable chips turnover thats is crucial to the highly volatile VIP Baccarat game in Asia, in order to sustain the theoretical win % of 2.7 and above to be profitable.

Just to make things clearer, since when that Macau’s overwhelming VIP gaming revenue been driven by the direct premium market???  Go ask the casinos.

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