Winning the business of the highest of rollers

By Liz Benston (contact)

Wednesday, Oct. 8, 2008 | 2 a.m.

A few resorts on the Strip have for the past few years operated posh gambling rooms that can be reserved by whales and closed to the general public.

Resembling a typical high-limit pit, these private gaming salons, enabled by legislation in 2001, are outfitted with millions of dollars’ worth of surveillance equipment. At the other end of the cameras are state Gaming Control Board agents who can tilt, pan and zoom in on every hand.

It has been a seemingly incongruous marriage of the private and public to lure international high rollers, and an experiment with a practice cultivated in less-regulated gambling jurisdictions than Nevada.

At a time when casinos are suffering from the sliding U.S. economy, the state is updating rules for gaming salons to boost business from those who, at least in theory, are least affected by economic woes.

Industry experts say the time is right.

Legalized to keep up with competitors in the high-roller game, including the gambling enclave of Macau, China, and California’s tribal casinos, the salons are more important now that Las Vegas companies such as Wynn Resorts, Las Vegas Sands and MGM Mirage have opened luxury casinos in Macau, where they are cultivating customers for their Strip properties.

For years, the salons were financial duds, costing casinos a lot more to set up than the play they attracted. The 9/11 attacks, which hurt Las Vegas’ international high-roller business, didn’t help.

At least one operator, Mandalay Bay, no longer operates private salons, and in 2004, regulators noted that not one player had used any of the state’s private salons for a nine-month period the previous year.

Then, in 2005, Steve Wynn brought to light a potential reason they weren’t being used — a requirement that gamblers bet at least $500 per hand in these private salons. Wynn, who at the time was seeking a license to open Wynn Las Vegas, told the Gaming Control Board the requirement didn’t make sense.

The state had established the minimum wagers, along with credit-line rules, to limit the rooms’ use to the high-rolling elite.

Only the wealthiest players, the state reasoned, would have the privilege of gambling in special rooms made possible by the repeal of a cornerstone of Nevada gaming law — that all gambling be conducted in public.

Since Wynn spotlighted the issue, regulators have discussed tweaking the rules. The board will take up the discussion again at its monthly meeting in Carson City. Separately, the Nevada Gaming Commission, which decides matters of policy, will vote on potential changes in November.

If approved, the new rules would allow casinos to set their own minimum wagers for players. Also, the requirement that players have a minimum credit line of $500,000, or a combination of cash and credit totaling that amount, would be reduced to a $300,000 credit line or that amount in a front-money deposit.

Handing over cash minimizes potential collection problems, Gaming Control Board member Randy Sayre said.

The board also has proposed removing a requirement that casinos submit a business plan for their gaming salons before the salons are licensed.

Salons generally function as public high-limit areas until players reserve them for private use. Managers then close the doors and activate special surveillance equipment — more than the law requires for typical pits.

Casinos are required to notify the Gaming Control Board when a private room is in use so regulators can watch the action on the room’s video feed. Under the proposed rules, casinos must call the board, then follow up with an e-mail. Casinos also notify the board when the room is no longer in use.

The proposed changes benefit operators “without removing regulatory oversight,” Sayre said.

Removing the minimum wager requirement would eliminate the awkwardness of having to tell a valued customer he can’t bet a certain amount of money “but can’t explain why, other than to say it’s the law,” said Bill Bible, president of the Nevada Resort Association.

Wynn put it more bluntly at the 2005 licensing hearing for Wynn Las Vegas.

“Why would the state of Nevada want to micromanage a baccarat game in which 3 or 4 million could change hands?” Wynn asked the Gaming Control Board. “I would think the only thing the state of Nevada would care about is that the guys play.”

He talked about gamblers with somewhat peculiar betting patterns, including the player who went from a win of $12 million to a loss of $8 million by betting $150,000 a hand at baccarat for 15 hours. Then, after pausing for a cup of Chinese tea, the player began to bet $50 a hand.

“It’s none of your business, as far as their attitude towards us is concerned, what they bet,” Wynn said at the time. “We don’t allow people to go into the (private) salon that don’t risk hundreds of thousands of dollars an hour ... the market takes care of that.”

Wynn, Venetian, Caesars and Mirage operate private gaming salons in Nevada, which keeps salon revenue confidential.

Will removing the minimum wager boost business in these spaces?

“That’s the $64,000 question,” Bible said. “It’s another arrow in the quiver to attract premium players.”