VIP rooms

One of the things that struck me in Macau casinos was the prevalence of private VIP salons. Leased by junket operators, they give a share of profits to the casino but seem to be independently run. At last, there’s something in print that explains the phenomenon.

From The Standard:

Macau’s four main casino operators - Las Vegas Sands, SJM and Wynn Resorts, in addition to Galaxy - all have VIP rooms. The VIP rooms are often operated by other entities, such as Heritage International and Century Legend, which pass on most of the profits to casino owners.

For example, Heritage says operators of VIP rooms in SJM casinos typically must hand over 70 percent of their after-tax profits. Heritage also collects a commission on the amount of gaming chips its customers buy, typically around 0.7 percent.

Macau VIP rooms generated 28.9 billion patacas (HK$29.77 billion) of revenue in 2004, which was 72 percent of all casino revenue in the city that year and a 34 percent increase over 2003.

Galaxy, a consortium of Hong Kong and Macau investors led by Hong Kong-listed K Wah Construction Materials chairman Lui Che-woo, originally hoped to have 14 VIP rooms and no public gaming area in its Waldo casino, but Macau authorities restricted the number to eight.

Bets made in VIP rooms are usually much higher than those made on the floor. The minimum bet is HK$1,000, and wagers of up to HK$1 million are not uncommon.

High-flying gamblers are usually asked to join members in the special rooms.

Casino operators and VIP room owners also employ agents in Hong Kong, Beijing, Shanghai and overseas to identify wealthy individuals with a yen for gambling.

The Standard - Investor eyes $2b jackpot in casino VIP room offer - Business Section

I wondered exactly what the deal was with these rooms, and now I know…I think.