Macau players and Las Vegas baccarat

I was just looking at the Macau gaming revenue numbers, and I see that they are now almost triple those on the Las Vegas strip. Baccarat alone is at $13.5 billion dollars in 2009 (compared to baccarat on the strip at just under a billion at the end of 2009). Macau jumped $1.3 billion, $3 billion and $2.1 billion in baccarat alone over the last 3 years.

Maybe I am wrong to be surprised that the baccarat numbers are soaring on the Las Vegas strip. I mean basically Macaus is increasing by amounts that exceed total baccarat revenue for the strip.

Considering the difference in the tax rates between Vegas and Macau, it makes sense that as the market keep s growing in Macau, you can fly people to Vegas to exploit the difference.

The air miles from LAX to Hong Kong are 7,244 statute miles. The planes used to have trouble making that distance in heavy winds and would have to land in Tapei to refuel. The jet stream is with the plane when it is returning to the USA, and the plane always makes the distance on the return trip. To fly to Vegas is only an additional 37 miles (great circle path).

But it is 6,518 miles to Shanghai and 6,229 miles to Beijing. Beijing Capital International Airport is now the third largest airport in the world (behind Atlanta and London Heathrow). But it is only behind Heathrow by 1% and will easily pass that airport in 2010. At the rate it is expanding it may surpass Atlanta in four years.

A quick check of the airlines that carry international passengers in and out of McCarran airport indicates that there is now only one American company, Westjet, and they carry only 4% of the international passengers (to Canada only).

Aerolitoral - Aeromexico
Aeromexico
Air Canada
British Airways
Condor Flugdienst
Korean Airlines
Mexicana
Philippine Airlines
Sunwing Airlines, Inc. (Canadian)
Universal Weather
Virgin Atlantic Airways
Vivaaerobus
Westjet Airlines


Maybe Vegas needs a jet to go to China at least three times a week. A total of 1200 Chinese gamblers per week might be what the strip needs.


Vegas trailing 12 month totals in Baccarat.

WestJet is Canadian.

I suspect that the big casinos are flying people in from China to Vegas on private jets already.

American carriers (except Southwest) do not use Las Vegas as a hub and there are laws in place to prevent American carriers to fly to foreign destinations when they are not flying from their hub. For example, United does not fly internationally out of Dallas or New York, only Chicago, Washington, Denver, San Francisco (with one flight for some reason out of LAX and SFO). United does fly to Toronto from Vegas.

I know that Sands maintains a fleet of jets at LAS, including 747's.

Sorry about Westjet. The stats came from the airport website, and they didn't list United. I see a one-stop flight on their schedule to Toronto, but no non-stops. It looks like there are no American carriers that fly internationally from Vegas.

I suppose the biggest whales can come by private jet. I think private jet travel is insanely expensive. I see adds for $2300 for a single seat one way to Van Nuys airport in Los Angeles. I can't imagine what a private jet costs from Hong Kong. But some kind of scheduled service would presumably have coach seats for $3K-$5K or less round trip. That could bring in the wealthy gambler, but not one who can lose millions.

In a few years you will be able to get from Beijing to Hong Kong in 10 hours, and from Shanghai to Hong Kong in 4 hours by high speed rail. I wonder what will happen to the gaming business in Macau when a billion people will be able to get there in one travel day at reasonable cost?

Only Mexicana, Aeromexico and Viva Aerobus fly directly, non-stop from Mexico to Vegas (from Mex City, Guadalajara and Monterrey). But US Airways runs flights Mex City to Vegas with a changeover in Phoenix. Additionally you can fly out of Mex City, Toluca, Monterrey and Guadalajara to Houston with Continental and then proceed to Vegas. Alaska Airlines offers flights to LA and thence to vegas. Delta has similar offerings. Lastly American Airlines shares codes with Mexicana and Delta with Aeromexico.

Bottom line is there are options. But not many and usually the cheapest way is to take eitehr Mexicana or Aeromexico (or Viva if you live in Monterrey).

I'd noticed there were several foreign airlines flying directly to Vegas, but I hadn't noticed no US carriers fly internationally from Vegas. They really should try doing that.

Minor quibble, Aerolitoral, which is a subsidiary of Aeromexico, now flies under the name "Aeromexico Connect."

I've been saying for years that if any high-end Vegas casino introduced a Macau style high-limit room, they would make a killing. By "Macau style" I mean:

1. Have a dead/promotional chip program.
2. Baccarat only.
3. Hide the casino as well as possible from non-Asian high rollers. I'm thinking on the top floor, with a key required for the elevator to go there.
4. Have all the usual Asian touches, especially lots of pretty girls to work there.

One factor working against this idea is that the big players from mainland China play through "junket programs." These are set up by people in the mainland that extend credit, and make arrangements with the casinos to host their players. The primary reason for this is the Macau casinos don't like extending credit to mainland Chinese players. I don't think Nevada Gaming would go for doing business with the Chinese junket opperators, who everybody in Macau knows, but nobody says, have close connections to organized crime. So the target audience would likely be Hong Kong/Taiwan players.

The Sands private fleet:

N388LS, a Lockheed 1011 (6340nm range), is owned by Sands and has been seen in LAS and MFM (Macau)
VQ-BMS, a 747, is also owned by Sands. Apparantly, it is used to shuttle gamblers from LAS and MFM. Seen in Tel Aviv and Tokyo

VP-BLK, another 747, has been seen in Las Vegas, Hong Kong, Bangkok, Singapore, Dubai, Tel Aviv. Now, it's for sale: Link
"157 seating capacity with 64 seats in commercial configuration aft, seven lavs, two galleys, on mid cabin and one aft, a mid galley and an aft galley, and luxurious mid, forward and second floor cabins."

Also, it owns 1 Boeing 737, a Boeing 767, 1 Gulfstream V and 3 Gulfstream IVs.

The 767 has been seen pretty much everywhere.
The Gulfstream V can also fly to Asia.
The Gulfstream IV and 737s I think have shorter ranges.

So the Sands flies their high rollers all over the world, all of the time.

Wynn also has jets as does MGM and Harrahs

Bellagio has a Salon Prive and there is a bank of elevators that is inaccessible to the public that connect directly to that room. The Salon is behind the Baccarat room and is curtained off.

Wynn didn't break ground in Macau until the law was changed to allow Macau casinos to extend their own credit.

Quote: boymimbo

Wynn also has jets as does MGM and Harrahs

I, of course, have no idea how international high-rollers are transported, and this post has nothing to do with Macau. But I know that Harrah's flies in groups domestically to several of their locations by charter flights (as opposed to on their own jets, I think), and other casinos do also. Perhaps they also use charters internationally. I've never taken one of those domestic flights myself, but I know RaleighCraps has been on some, though perhaps not Harrah's. One of my neighbors had a Harrah's comped charter flight to Tunica last year. I think it is interesting that you can go on Harrah's web site, check their schedule of "Harrah's Air" flights to various destinations, and ask them to quote you a price on one. Presumably, with an adequate history with them, they would comp the flight, but I don't know what kind of quotes they offer to low rollers. Some day maybe I will ask.

They often send mailings concerning flights to Tunica's executive airport (NOT Memphis) but the chartered flight fills up rather quickly so if you ever do get a mailing about it an almost instantaneous response is recommended. Its not really any sort of high rollers thing: just airfare, shuttle service and a hotel room. They put a massive charge on your credit card if you don't show up. And you get from Tunica's executive airport to the casino/hotel really fast, but your luggage gets "processed" and winds up in your hotel room about 3 hours or even more after landing, so don't have any meds or anything vital in your luggage. No one "dresses" for dinner in Tunica, but don't count on having your luggage by dinner time.

Quote: boymimbo

I suspect that the big casinos are flying people in from China to Vegas on private jets already.

Yes. Though many travel by a variety of Air Taxis. Most movie stars or other Hollywood types have private jets that are on leaseback to air taxi services.

I wonder if financial reports about the Drop on the Strip ever hide the effect of having had to pay for the High Rollers and whether the drop would include all those freebie chips/dead chips?

Quote: FleaStiff

They often send mailings concerning flights to Tunica's executive airport (NOT Memphis) but the chartered flight fills up rather quickly so if you ever do get a mailing about it an almost instantaneous response is recommended.

I have not received that kind of mailer from Tunica, just the free rooms. I was actually more interested in the flights to Reno. My wife and I have never visited Reno, and the commercial flights scheduled from here to there are quite tedious and seem to be priced a bit high. I just wondered whether the charter was a direct flight at an attractive price if not comped.

Quote: FleaStiff

I wonder if financial reports about the Drop on the Strip ever hide the effect of having had to pay for the High Rollers and whether the drop would include all those freebie chips/dead chips?

The monthly gaming reports do not, but the annual reports do have line items for Bad Debt, Commissions, Comp Expense, Junket. But then there are these huge line items that are simply labeled "other costs". They are under the Casino department and under the "general and administrative" department. So the actual expenses are kind of opaque. I think you basically have to be in the boardroom to know what costs are associated with February's record breaking $205 million haul in baccarat.

Wizard
The win percent for baccarat was also a record breaking 17% in February. The average is about 11.6%. The previous high and low win percentages have been 7% and 15%. My only thought is that somehow they got the players to stay in the game longer than usual for this Chinese New Years. Other than that the only thing I can think of is simple luck. Are you aware of any rule changes, or promotions, that the casinos may have used to raise the win percentage?

About the private salon at Bellagio, thanks, I didn't know about that. I think there is a similar one at Wynn. However, I'm quite sure neither does the dead chip programs.

No, I don't know why the Macau baccarat earnings spiked. I've always been one to see things more from the player side, so don't dwell on statistics like that. As you probably know, here in Vegas it is claimed that Macau doesn't deduct expenses that we do here, making comparisons unfair.

Quote: boymimbo

The Sands private fleet:

N388LS, a Lockheed 1011 (6340nm range), is owned by Sands and has been seen in LAS and MFM (Macau)
VQ-BMS, a 747, is also owned by Sands. Apparantly, it is used to shuttle gamblers from LAS and MFM. Seen in Tel Aviv and Tokyo

Here you can find pics of them:

http://www.airliners.net/photo/Lockheed-L-1011-385-3-TriStar/1384467/&sid=cdb6d4e853a14eae3a1d348da13b4fea

That one's a picture of both in LAS. Nice color scheme. And it's good to see a Tri-Star still in use.

Quote: Wizard

No, I don't know why the Macau baccarat earnings spiked. I've always been one to see things more from the player side, so don't dwell on statistics like that.

I guess I wasn't clear in my question as it was the Vegas baccarat earning that spiked in February. The win percent was 17%. But I will accept your statement that you don't dwell on statistics like that.

Articles like: Las Vegas Strip Casino Revenue Soared 33% in February (Update2) do point out that baccarat led the charge, but they de-emphasize or do not report the fact that blackjack and slots are still falling, and other table games are only doing marginally well.

Since the headlines for the next few months through at least July will be similar, there will be a false sense of security. But at the same time the Northern portion of the strip (north of the Encore) is getting more and more financially unstable. The cost in jobs could be huge, while baccarat only provides a few well paid new jobs.

Quote: Nareed

Here you can find pics of them:



That one's a picture of both in LAS. Nice color scheme. And it's good to see a Tri-Star still in use.

Thanks! I've always wondered who was behind those planes as I sat from my airport-facing room at the Mandalay Bay.

Paco, sorry I misunderstood your question. Your concerns are well founded. It is getting out of my area, so I'll refrain from comment.

These Jet Suite 4 psgr aircraft are merely very expensive, but not ridiculous. From Long Beach to Henderson it is $3K for four people (one way), but it sounds like you can do it for a lot less if you go several times a year.

I would say 3k each way is nothing short of amazing. That's affordable for a higher class professional looking for an amazing trip. I mean if I was 30 making 100k a year this might be a fun splurge with a few friends.

Quote: pacomartin

I guess I wasn't clear in my question as it was the Vegas baccarat earning that spiked in February. The win percent was 17%. But I will accept your statement that you don't dwell on statistics like that.

Articles like: Las Vegas Strip Casino Revenue Soared 33% in February (Update2) do point out that baccarat led the charge, but they de-emphasize or do not report the fact that blackjack and slots are still falling, and other table games are only doing marginally well.

Since the headlines for the next few months through at least July will be similar, there will be a false sense of security. But at the same time the Northern portion of the strip (north of the Encore) is getting more and more financially unstable. The cost in jobs could be huge, while baccarat only provides a few well paid new jobs.

IMHO, I think the Sands and Wynn are probably moving their whales from Macau to Las Vegas. In Macau you have to give up 39% of your revenue to the Government and pay off all of the middlemen via dead chips, promotional allowances etcetera. In Vegas you only give up 6.5% of your revenue. So you find players with an expected loss of more than a million, stick a bunch of 'em on one of your private 747s, let them drink, smoke, and gamble on the 13 hour flight. The flight is paid for by the tax savings.

I wouldn't worry about Circus Circus as it is owned by MGM. The Riviera, Sahara, and Stratosphere are all in trouble, to be sure, but I think that all of them will wait out the opening of Fountainbleau. Riviera is on the verge of bankruptcy, having defaulted on their credit line through all of 2009 and now paying interest rates of about 6.5% on its long term debt of 250 million. Likely the Stratosphere won't go anywhere because they have ownership (indirectly, Goldman Sachs) with deep pockets and some diversification. The Sahara is owned by Sam Nazarian's group and also will not likely fall because of Nazarian's deep pockets. My prediction is that Riviera will probably get snatched up by some investment company and remain open until Fontainebleau opens. It will be interesting to see what Icahn does with the property but my guess is that he'll do nothing with it until the recession ends and there is demand for more rooms in Vegas, when he'll sell the resort to someone else who has the pockets to complete the project and open it. I wouldn't expect Fontainebleau to open until 2013. If that's true, and Echelon remains in its state of dormancy, it does spell very toubled times for those four casinos.

Quote: Doc

I think it is interesting that you can go on Harrah's web site, check their schedule of "Harrah's Air" flights to various destinations, and ask them to quote you a price on one.

I didn't see the link for that.

I'm coming in September, staying at Imperial Palace. It would be cool to fly on Harrah's Air, although I doubt they'd come close to the price I got from Continental.

Wynn used to have a deal where they would fly you on a "private plane" (it was actually a 50 seater run by ExpressJet) from Burbank or LAX to Las Vegas with three nights for under 1K. But these (and Harrah's air) is aimed at the upper middle class who want a special experience that is affordable.

The concept is not a bad one, but I think that a truly private experience would be if you were to deposit $250,000 or more at a resort and have a plane pick you up, on the Casino's account.

Quote: boymimbo

I wouldn't worry about Circus Circus as it is owned by MGM.

I have had some debate about this concept. I don't know if the size of the corporation means that they will continue to run the operation at a loss. Vegas hotels seem to need massive periodic upgrades of the rooms and facilities which are not justified if the the rooms are going for $45 with a high vacancy rate. Although they are not releasing attendance figures I think the Adventuredome is well under 3 million kids per year. The corporation also runs a media risk for running a pathetic looking operation.

In another place I simply counted rooms at the six north strip casinos, and they are less than the total number of rooms added in 2008-2009. That is 15K rooms, with 4K more coming this year, and no additional people.

But the slot revenue is significant. People are not feeding slots anymore. Without slot revenue you can't keep running the old style casino where food, drinks, rooms, and entertainment are at a loss.

Quote: pacomartin

I have had some debate about this concept. I don't know if the size of the corporation means that they will continue to run the operation at a loss. Vegas hotels seem to need massive periodic upgrades of the rooms and facilities which are not justified if the the rooms are going for $45 with a high vacancy rate. Although they are not releasing attendance figures I think the Adventuredome is well under 3 million kids per year. The corporation also runs a media risk for running a pathetic looking operation.

In another place I simply counted rooms at the six north strip casinos, and they are less than the total number of rooms added in 2008-2009. That is 15K rooms, with 4K more coming this year, and no additional people.

But the slot revenue is significant. People are not feeding slots anymore. Without slot revenue you can't keep running the old style casino where food, drinks, rooms, and entertainment are at a loss.

I thought I read once that CC was once MGM's most profitable property. But since Boyd came in and dropped a deuce on the North Strip by imploding Stardust, and replacing it with nothing, they have been struggling. The recession is hurting them also since the up-scale joints are being forced to cut rates so much. When you can get a $35 room at CC, but pay $70 and get a mid-range place, the choice is easy for most people.

That said, it makes zero sense for MGM to shut down CC operations. They are still earning postive EBITDA, and any interest payments don't go away if you shut it down.

Quote: ruascott

That said, it makes zero sense for MGM to shut down CC operations. They are still earning positive EBITDA, and any interest payments don't go away if you shut it down.

Last quarter of CY2009 the EBITDA at CC was positive $2.261m, but the depreciation and amortization was $5.633m with meant it had an operating loss of ($3.398)m. They are also losing money at their operations in Jean, Railroad Pass, Circus Circus in Reno, and their half share of Silver Legacy in Reno. They sold Primm casinos two years ago and the buyer, Herbst Gaming, went into bankruptcy.

Circus Circus was used to secure some of the loans for City Center, but is no longer encumbered.

I agree with your statement in general. If Circus Circus was making $1 the corporation would keep it intact simply because it preserves the large parcel of land for future development. But it is starting to lose money, and may require a major overhaul simply to keep it safe and secure. At some point, it may make more sense to implode the main building, and run it as an RV park with the SLOTS-A-FUN casino servicing those customers.

Even if there is no interest, you still have to pay the real estate taxes.

Absolutely, the north strip suffers because there is no foot traffic. People used to walk (my wife and I did it several years ago) from the center strip, through the Wynn, to the Frontier, to the Stardust, to Circus Circus, Riviera, Sahara, and the Stratosphere. Now when my wife and I started walking from the Wynn northward, we saw no reason to go beyond Encore.

Riviera's 2009 annual report states that the loss of foot traffic and reduced overflow from the LV Convention Centre is a major reason why it's losing (and of course, the economic downturn). But this area will continue to suffer while Echelon and Fontainebleau stay in dormancy. I don't think Icahn is going to build Fontainebleau but will just hold the property until values come around again. Fontainebleau is therefore probably a minimum two years away. Echelon is probably at least 5 years away. These north end resorts don't really have a chance until one of these are done and won't thrive until they're both done. Riviera won't last five years. The other three depend on the investors and the depth of their pockets.

But if Vegas can keep Bacarrat moving, and the the profits are fairly evenly spread between Sands, Wynn, MGM, and Harrahs, then the south strip will be well positioned for the recovery.

Quote: boymimbo

Absolutely, the north strip suffers because there is no foot traffic. People used to walk (my wife and I did it several years ago) from the center strip, through the Wynn, to the Frontier, to the Stardust, to Circus Circus, Riviera, Sahara, and the Stratosphere. Now when my wife and I started walking from the Wynn northward, we saw no reason to go beyond Encore.

Riviera's 2009 annual report states that the loss of foot traffic and reduced overflow from the LV Convention Centre is a major reason why it's losing (and of course, the economic downturn). But this area will continue to suffer while Echelon and Fontainebleau stay in dormancy. I don't think Icahn is going to build Fontainebleau but will just hold the property until values come around again. Fontainebleau is therefore probably a minimum two years away. Echelon is probably at least 5 years away. These north end resorts don't really have a chance until one of these are done and won't thrive until they're both done. Riviera won't last five years. The other three depend on the investors and the depth of their pockets.

But if Vegas can keep Bacarrat moving, and the the profits are fairly evenly spread between Sands, Wynn, MGM, and Harrahs, then the south strip will be well positioned for the recovery.

Well said. Sahara, Strat and Riv are certainly in trouble. I don't know what the convention center numbers are projected to be this year. That's really the only thing that would continue to draw large amounts of people up there.

Quote: ruascott

Well said. Sahara, Strat and Riv are certainly in trouble. I don't know what the convention center numbers are projected to be this year. That's really the only thing that would continue to draw large amounts of people up there.

Not necessarily.

I was at a convention last year and stayed at Sahara. This year, same convention, I'm staying at Imperial Palace.

Both are monorail hotels....

The Valley may end up in better health if 5K to 10K of rooms are pulled out of the supply. However, the effect on employment will be punishing. The revenue at the Stratosphere is terrible.

Remember the Southwest flights are lower than they were 2 years ago, and every other airlines has only a minimal presence today. Allegiant (the local airline) is growing, but still brings in a relatively small number of people from tiny airports in western and midwestern USA (not the East Coast). The international air traffic is not staying on the north strip

With no increase in air traffic, no increase in automobile traffic, and a train still at least 4-5 years away there, and slot and blackjack revenue plunging there simply isn't demand for budget casinos.

Downtown would probably be better off if the Plaza wasn't selling 1000 rooms for $22 per night (midweek). It is a debatable point, since many would argue that you don't want to give up any rooms. But it cheapens the product too much.
Downtown needed for available room night to make an additional ( to break even)
$8.50 for gambling
$2.30 for room
$2.25 for food
$1.00 for drinks
$1.00 for sundries
If there is to much competition at the bottom end, they can't charge more.

Quote: DJTeddyBear

I didn't see the link for that.

I'm coming in September, staying at Imperial Palace. It would be cool to fly on Harrah's Air, although I doubt they'd come close to the price I got from Continental.

Been out of town, so I apologize for being slow to get back to you.

One of your difficulties might be that I used the wrong name: It is "Total Rewards Air" not "Harrah's Air". Another problem might be that they apparently don't support trips to Vegas. They have flights from various cities to Atlantic City, Tunica, Reno, Lake Tahoe, and Laughlin. I assume that the Laughlin trips actually fly into Vegas, but I don't know. To find the link, go to the general Harrah's web site, select a casino in one of the above locations, then look in the list on the left side for the link to Total Rewards Air. Here is the direct link for the Laughlin flight schedules.

I just booked two trips to Vegas from Raleigh, NC on Southwest.
May, Sun thru Thur. ,>30 day advance, total R/T was $370 per ticket.
I also bought Southwest tix for Sept, Fri thru Tues. Those tix were $340 R/T each.

If the rooms weren't free, this would be a much tougher decision.

Laughlin flights fly into Bullhead City, Arizona.

Quote: Doc

I assume that the Laughlin trips actually fly into Vegas, but I don't know.

The airport is in Bullhead City, AZ which is a two minute water-taxi ride from the casinos. (Or used to be, its been a long time since I was there). I do recall the time they actually held the airplane for me when I was taking the water taxi from the casino. Now I understand that the Laughlin properties have deteriorated even to the point of noisy and unrepaired elevators. I don't see why anyone in Vegas would want to trek to Laughlin but I've been told there is a bus that gives you some teasers if you do it. My last trip to Laughlin was in the days when that bridge was just beginning to be used. The water taxi was fun and Bullhead City was going from One Stop Sign to a real estate boom, but that was decades ago. Everything after that is pure hearsay.

The most memorable thing about Laughlin for me was that is where I overheard the dealer say to the box: "He could have really hurt us if he knew what he was doing" after I had had a lengthy roll with my miserable PassLine bet.

Thanks to both teddys and FleaStiff for educating me on the Bullhead City airport. I have never seen it.

Actually, my wife and I like Laughlin, provided we're not trying to find a show or something the way we would be in Vegas. It's interesting to be in a casino hotel bar, looking out a big picture window, and seeing a really beautiful river flowing through the desert. Where can you do that in Vegas? And it's a much less hectic environment, still with some lovely casinos. We have only been there twice, with our third visit coming up the end of this month. As I have noted before, on our Vegas trips, we like to get away from the strip for a while, usually a couple of days, to de-compress. This trip we will head down to Palm Springs for two nights then Laughlin for two nights before going back to Vegas.