Sunday, Jan. 17, 2010 | 2 a.m.
Understanding the game
- Origins: Baccarat, pronounced bah-kah-rah, is a card game believed to have been introduced to France from Italy during the reign of Charles VIII of France, who ruled from 1483-1498.
- Outcomes: It is a simple game with only three possible outcomes — player, banker or tie. In the variation played in Las Vegas and Macau casinos, the casino banks the game at all times but has a low house edge. Players may bet on either the player or the banker, which are designations for the two hands dealt in each game. The object is to bet on the hand that totals closer to nine.
- The basics: The cards are dealt face down, one to the “player” first, then to the “banker.” And then the same again, so there are two cards each. Both cards in each hand are then turned over and added together and the dealer calls the total. The player and banker can then draw a single card or stand pat. The hand with the highest total wins. Tens and face cards all are worth zero points; all other cards are worth their face values, with the ace worth one point. If a total is more than 10, the second digit is the value of the hand. For example, a 9 and a 6, which total 15, make up a five-point hand.
An exclusive class of customer deserves a good deal of credit for the Strip’s first increase in reported gambling revenue since 2007 — high rollers who play a game that most Americans don’t pronounce correctly.
Baccarat, the high-stakes card game favored by James Bond, accounted for nearly 20 percent of the Strip’s gambling revenue in November, the Gaming Control Board announced last week. Strip casinos reaped $92.7 million from baccarat players that month — a 136 percent increase from a year ago.
In November, baccarat players wagered a whopping $690.8 million at Strip resorts, about 14 percent of all the money bet in those casinos and an 84 percent increase compared with November 2008.
It was the latest evidence of a trend.
While Strip casinos made less money on most of their games last year, baccarat was an exception, and its momentum has been building. From August through November, each month’s baccarat revenue was more than 30 percent higher than it had been in the same month of 2008. Baccarat wagers rose by more than 40 percent in those months.
The trend was not lost on the Hard Rock Hotel. The larger high-limit room it opened the week before New Year’s Eve includes a secluded area designed to accommodate more baccarat tables than in years past.
But off-Strip, baccarat is a rarity. The game is mainly found in the high-limit rooms of the Strip casinos that cater to the wealthiest gamblers.
Baccarat can be an expensive business for casinos, given the money they have to spend to attract high rollers, which can include flights to and from the casino for the gambler and his family, complimentary suites, meals, gifts and other perks. Working against a small house edge of less than 2 percent, baccarat players can leave a big dent in a casino’s bottom line if they get lucky, especially if they are “whales” betting $100,000 a hand. Most casinos don’t offer baccarat for that reason — and because the number of people who play baccarat in the United States is relatively small.
Tens of thousands of people gamble at slots and blackjack tables in Las Vegas every year, but baccarat players number in the mere hundreds. Many of the Strip’s baccarat tables are empty much of the time and are mostly used on weekends or days that coincide with holidays or special events such as prizefights and major concerts.
A period that has consistently produced some of the most baccarat action for the Strip is one coming up next month — Chinese new year. Therein lies a key to what has been happening with baccarat on the Strip.
Beginning about four years ago, several Strip resorts started opening sister casinos in Macau, a province on the South China Sea. Macau casinos are dominated by baccarat tables in the same way that U.S. casinos are filled with slot machines.
Macau is the world’s most lucrative gambling destination thanks primarily to baccarat players. At Las Vegas Sands’ three Macau casinos, for example, the top high rollers, many of them baccarat players, wagered $16.7 billion in the third quarter of last year — about a billion more than gamblers wagered in all of the games offered on the Las Vegas Strip during that same period.
Most casino revenue on the Strip still comes from slot machines. But it’s a smaller percentage today than it was a few years ago, when the economy was booming and the masses had more to spend.
In 2005, the year before Steve Wynn opened Las Vegas’ first satellite casino in Macau, baccarat generated 11 percent of the Strip’s gambling revenue. For last year through November, the figure was a little more than 16 percent.
The combination of the Macau connection and the economic health of China and Hong Kong is boosting business at the Strip’s baccarat tables, according to industry experts.
While the U.S. recession contributed to the worst year on record for MGM Mirage, the corporation’s chief marketing officer, Bill Hornbuckle, said its business from international visitors, driven by Asian gamblers, may have hit a new high.
For Las Vegas Sands, it’s a tale of two worlds — baccarat versus everything else. Despite poor earnings from its Venetian and Palazzo resorts in Las Vegas, the company reported record third-quarter earnings from its Macau casinos, where it offers more baccarat than other games. And while the company’s other Las Vegas business segments tumbled, “premium” baccarat players at its Strip casinos wagered 4 percent more than during the same period a year ago.
On the Strip, Las Vegas Sands and the other casino giants are tight lipped about their high rollers, so ascertaining how many of their baccarat players come from Asia is difficult.
But Joel Simkins, a gaming stock analyst with Macquarie Securities, says Las Vegas casino operators cultivating customers in Macau “have more of an incentive to get them to come to Las Vegas.”
In Macau, access to high rollers is largely controlled by junket operators — third-party hosts who demand hefty commissions that eat away as much as 40 percent of the revenue that casinos get from VIPs, and casinos pay 33 percent less on their revenue in Nevada than they do in Macau, Simkins explains.
Las Vegas-based casino companies in Macau have had some success in attracting Chinese gamblers to the Strip, Hornbuckle said last week just before leaving for Macau, where his company opened a resort in December 2007.
“We have (marketing) people focused on those parts of the world that have not suffered the crisis that we have” in the United States, he said. China, the world’s largest emerging market, is the prime example.
Unfortunately, Asian baccarat players aren’t a big enough market segment to rescue the Strip from the downturn. Still, casino operators expect they will become a bigger profit center as casino companies work with tourism officials to boost the number of mainland Chinese who travel to Las Vegas.
Official statistics are unavailable, but visitors from China probably make up fewer than 300,000 of Las Vegas’ annual visitor traffic of more than 30 million people, Hornbuckle said. These visitors have to obtain travel visas from their government and those visas are hard to get. As a result, most of the tourists are members of China’s wealthy elite, and, Hornbuckle said, they have a significant effect on tourism disproportionate to their numbers.
Especially if they are baccarat players.