How VIP Market Operates in Macau and China

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An insider’s take on how casino junket agents recruit VIP players in China.
This month a leading figure in the Macau gaming industry explains how the agents identify and then ‘recruit’ high roller players in the first place.

Extending gambling credit to VIP players via sub-contracted third-party agents or sub agents, rather than direct from the casino to the player, is a central pillar of the Macau gaming industry. To a lesser extent it is also a feature of some other Asian landbased gambling jurisdictions including the Philippines and Cambodia. The online gambling industry in Asia also uses thirdparty agents for the provision of credit and collection of debts.

The stakes are very high when it comes to recruiting high net worth casino players, because agents and sub agents—depending on their place in the junket system pecking order—may be paid either a recruitment fee or take as commission a percentage of the revenue ‘rolled’ by the VIP player over the course of a month, six months or a year.

There are potentially a lot of VIP players to be recruited in China and a lot of commission to be won. As reported in IAG last month, a recent study published by investment bank Merrill Lynch in October in association with Capgemini, a business consultancy, estimated there were around 345,000 US dollar millionaires on the Mainland.

Among that group of Chinese millionaires are a group Merrill labelled as ‘Ultra-High Net Worth Individuals’. These are nearly 5,000 people with net worth of at least US$30 million. Of that cohort, 106 were classed as US dollar billionaires.

An obvious question is how do these third party betting agents make contact with such potentially lucrative players in the first place, given that in China, a key market for Macau and casinos overseas, the advertising and marketing of gambling and gambling products is illegal?

The answer is many different ways—some of them through introduction or social networking and some of them through a growing system of VIP clubs.

“You can think of the junket network as the foot soldiers of a multi-level marketing strategy, rather like that you might find for a company selling consumer products such as Amway,” the industry insider said.

“They have thousands and thousands of people in China. In each province and each city, they know all the important people. They know who’s who. They know who are the big factory owners, they know the business people, they know what business they’re in, and by knowing them they have a way to help these ‘customers’ to come to Macau and gamble.

“Because advertising of gambling is clearly prohibited in China, the junkets provide an important network,” he adds.

The source says the network of VIP clubs is growing within Mainland China. They have many of the luxury facilities found on the VIP floors of Macau casinos—with the crucial difference that there are no gaming tables or machines, and no gambling is permitted.

HI - TECH POKER THREATS

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As poker takes off in Asia particularly in Macau, and the sums involved grow, cheaters will employ increasingly ingenious methods to make off with players’ money. Infamous casino scammer turned anti-cheating expert Richard Marcus warns of the potential high-tech security scams to be aware of in brick and mortar cardrooms
For several years now, we’ve been hearing about high-tech scams in online poker games. First came collusion-type cheating engineered by players using multi-PCs and multi-IP accounts. Then came poker “bots” whose software programs are now believed capable of incorporating artificial intelligence into strategy decisions. And recently, we’ve heard reports of hacked security codes and high-tech money laundering involving criminals washing their illicit earnings while playing poker online.

But what about good old-fashioned lowtech or non-tech poker rooms? Are they safe from crafty cheaters using high-tech wizardry to earn ill-gotten gains?

Well, until two years ago it appeared that they were. Besides some weak and rather unprofessional attempts to use hidden computers to track played cards (especially in stud games) and calculate playing and betting strategies with that knowledge, nothing much about sophisticated technology was heard through the real-world poker-cheating grapevine.

Something up her sleeve
That changed in 2005. In September of that year, a woman playing three-card poker at the Mint casino in London, England, aroused suspicion while winning at an exorbitant rate—34 of 44 hands, which is highly unlikely at that game. The same woman had been noted winning at similar rates in other London casinos offering three-card poker. Another thing Mint security personnel noticed was that a white van was parked in the proximity of the Mint’s front entrance—as also observed during her previous wins at the other casinos.

An immediate on-site investigation was launched, and it was discovered that beneath her sleeve, the woman was wearing a harness on her arm that housed a tiny digital micro-camera. Sitting in the back of the van outside, security staff found a computer techie hunched over two computer screens. One was for the live camera feed, the other to play the recordings of what the woman’s hidden micro-camera was filming inside the casino: the cards coming off the dealer’s pack as he dealt them facedown to the players and himself.

By positioning her arm on a downward slope from the dealer’s hands as he dealt, the woman’s camera was able to film the cards’ faces. Back in the van, the techie slowed down the digital images on the screen and perfectly read the cards. He then relayed the info back to the woman and another man—also an accomplice— at the table, through the hidden earpieces they wore. The two cheating players were thus able to play their hands with an enormous edge on the casino.

True, three-card poker is not poker, but it is a step closer to it than say blackjack or roulette. It is certainly a poker derivative game. But if this incident was not enough to make you wary about possible goingson in brick and mortar cardrooms, in July this year, we learned of another frighteningly high-tech scam that did involve poker in a brick and mortar room, just not a public cardroom.