We all know the saying “the house never loses”, even if you don’t gamble at casinos, you know ahead of time that this is the likely outcome.
However, as it turns out, the house can lose, as Steve Wynn, founder of Wynn Resorts discovered recently. The rather astonishing news that arrived on Wynn’s desk in April was further soured when the 75 year old casino mogul learnt what the total losses in revenue amounted to $10 million.
Wynn can easily look back on his 50 plus years of experience in the casino industry and not find anything that comes close to this rather unusual turn of events. So how could this have happened? How did one casino in the Wynn Resorts Ltd. manage to lose that amount of money in one month and, perhaps even more astonishingly, on one particular casino game?
Wynn Resorts Ltd. spans the globe, with billion dollar casino and leisure resorts located in a number of prime international gambling destinations. Macau is one such destination and, as it so happens, also the source of the losses for Wynn.
Wynn’s Macau casinos are among the most popular and most visited of any casino resort in the world. Getting players in, particularly high rollers from all over the world is not only a priority, it is also big business revenue for junket operators. If you are unfamiliar with this term, junket operators are essentially subcontractors to major casino resorts.
Junket operators offer packages to VIP casino customers, aka ‘high rollers’ to travel and play at certain casinos. Now, depending on the level of the player, the casino will pay for the players travel, accommodation and extras. In exchange, the player undertakes to play exclusively at that casinos tables.
The casino will also pay the junket operator for bringing the high rollers in. Junket operators will front the high rollers cash and set them up in suites and private rooms. These junket operators are then paid by the casino on a commission basis. Commissions are usually based on the amount that their high rollers bet at the casinos tables. They are also ‘on the hook’ for the gamblers wins at the casino.
In the case of the $10 million Wynn Resorts Macau losses, the junket operator responsible was Suncity Group, one of Macau’s biggest in the game. The group brought in VIP clients during the month of April to Wynn Palace, the newly opened casino resort on the Cotai Strip which cost Wynn Resorts Ltd. a cool $4.2 billion to build.
All of the lost $10 million sustained by the casino resort occurred at the casino’s baccarat tables. This is hardly surprising as the game is more popular in Asia than roulette, blackjack or poker.
As anyone who knows anything about casinos and gambling, one thing is certain – winning or losing can turn on a single roll of the dice or turn of the cards. Baccarat is one of the best example of how fortunes can change in an extremely short space of time. This in one of the reasons why this game is so popular. Baccarat also offers the best odds for players and usually attracts the biggest players in the world. In fact, baccarat odds are even better than one could expect from playing slots. With a house edge of around 1.2%, players can expect to lose $1.20 over every $100 played whereas slots average around $12 over every $100 spent.
What are the odds of a group of players in Macau taking Wynn Resorts for $10 million on one month? Pretty high!