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April 17, 2014

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Baccarat defies recession by drawing gamblers willing to part with a fortune

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Leila Navidi

A baccarat game is shown this year in the high-limit room at Hard Rock Hotel. The high-stakes game is reaping big profits for casinos.

A Simple Guide to Baccarat

Baccarat is a growing business here in Las Vegas. The Sun brings you an introduction to the game so you can test your own skills on the casino floor.

No casino game may be more intimidating than baccarat, typically played at high limits in elegant, sequestered rooms with tuxedoed dealers, attentive casino managers and waitresses quick to appear with fine cocktails.

It was played by European royalty in the 13th Century and by James Bond in the 20th, memorialized in such stylish films as “Dr. No” and “Casino Royale.”

And yet, for a game wrapped in mystique, baccarat is one of the simplest games in a casino. Were it repackaged as a carnival game at a county fair, its aristocratic trappings stripped away, it could be called “Count to Nine.”

The baccarat played in the United States and many other countries requires no skill. Moves are forced by the cards players are dealt. Simply put, the two- or three-card hand closest to the value of nine wins, excluding face cards and “10” cards that are worth zero.

This seeming contradiction between sophistication and simplicity helps explain the success of baccarat in the majestic resorts of Las Vegas, which are designed to foster the escapist fantasies of their customers.

Baccarat is a rarity, a game that is growing in the recession. Generating more revenue than any other table game in Nevada, including blackjack, the game pulled in 17 percent of the Strip’s gambling revenue last year versus only 9 percent in 2004.

Baccarat numbers are so healthy that it was the focus of its own seminars during Global Gaming Expo, the industry’s largest annual conference, meeting this week in Las Vegas.

There’s more to the game’s popularity than its slim rule book.

Mathematically, a bet in baccarat is similar to a coin toss in that players have nearly a 50-50 chance of winning, making baccarat one of the most reasonable propositions in a casino. While the house edge for unskilled blackjack players is around 2 percent, baccarat has a house edge of about 1.1 percent, meaning players can expect to lose $1.10 for every $100 they bet. American roulette, by comparison, has a house edge of 5.26 percent.

“There’s no skill required to exact that low house edge,” said Roger Snow, a senior vice president for Shuffle Master, a Las Vegas company that makes card shuffler machines for baccarat and other casino table games worldwide. “With the first hand you play you’re as good as anyone who has played for the last 20 years.”

But for all its simplicity — or maybe because of it — there is no lack of drama, which might keep more casual players at bay.

•••

This brings us to J.P. O’Hair, a trauma surgeon by day and a card-conjurer by night. He thrives in the stress of both settings.

Wearing a dark suit for the evening, he’s hunching down at a high-limit baccarat table at Mandalay Bay, his eyes almost level with the table.

Rather than immediately turning over the cards dealt him, O’Hair is playing baccarat the so-called Asian way, teasing himself by bending each card just enough to see a hint of its value. He builds excitement around an otherwise simple finding of fact: whether his cards will add up to nine. He stares at the cards as if he is trying to cast a spell, wishing certain values to appear.

An Asian man sitting next to him and who is betting on O’Hair’s hand shouts “Monkey! Monkey!” — the nickname for a no-value face card that he hopes will be drawn next.

It is, and O’Hair wins a $500 chip. The other man, who bet O’Hair would win the hand, adds another $1,000 chip to his own stack and nods in satisfaction.

That’s small potatoes. News media recently reported losses of $115 million by two big baccarat players in Singapore, where its first two casinos opened this year.

Macau, the world’s largest and most lucrative gambling market, also has the world’s largest concentration of baccarat tables. Casino games generated $14.9 billion in revenue last year in Macau, most of it from baccarat, and generated $16.7 billion in the first nine months of this year — a 60 percent increase from 2009. By comparison, Nevada’s gambling revenue from all sources was $10.3 billion for the 12 months ended Aug. 31. One of the only games that increased was baccarat.

Many baccarat players are from Asian countries with growing economies, partly explaining why gamblers are flocking to the game. Also, high-end resorts in Las Vegas are hosting greater numbers of baccarat players cultivated from sister casinos in Macau, the only place in China where casinos are legal.

“If you love tennis you want to go to Wimbledon. If you love golf you want to go to Scotland. Baccarat players can get their fix in Macau. For the Chinese, it’s their dream to come to Las Vegas,” said a baccarat dealer on the Strip who asked his identity be protected. Most of his baccarat players are from China or ethnic Chinese from other countries including Canada, Mexico and India.

There’s no more appealing forum for a Chinese gambler to display wealth than baccarat, where large wagers are encouraged and, in some casinos, afford the biggest gambler at the table the right to deal the cards.

“Gambling is part of the culture in China, and the bigger the gambler, the more the prestige,” said the dealer, whose table requires a minimum bet of $25,000 and allows a maximum bet of $300,000.

To oblige their primarily Asian clientele, some Las Vegas resorts have increased already rich table limits to astronomical heights. Bellagio, for example, recently increased its maximum baccarat bet to $200,000 per hand from $150,000 per hand.

Besides big money, baccarat encourages theatrics that wouldn’t be tolerated elsewhere in a casino. Not only are they annoying to some outsiders, they slow down the casino profit machine.

Along with bending cards, some baccarat players blow on their cards for good luck. After a bad hand, players frequently mutilate offending cards by tearing them down the middle, tossing them across the table, scribbling down a preferred numerical value on a card or, in an act of cosmic retribution, stabbing it with a pen.

•••

Baccarat is also unique for the meticulous records players keep on whether a hand was won by the “player” or “banker” — one of two primary betting positions in the game. While the “player” position is much like betting on a hand in blackjack, “banker” allows the player to effectively bet on the dealer’s hand — a proposition with slightly better odds that are evened out by a “commission” paid to the casino on “banker” wins. Gamblers may also bet on whether a tie will occur, though they often avoid this long-shot wager.

In search of patterns they think will predict the future, gamblers use different symbols to record winning positions, one after the other, on pieces of paper or score cards provided by the casino.

Though random, these results — scrawled up and down or side to side on paper score cards, depending on the gambler’s individual style — are much like tea leaves that appear to reveal recognizable shapes in the bottom of a cup. Gamblers may continue a “banker” bet if that position has won several times in a row, for example. A gambler may be more willing to try a “player” bet if the “banker” bet only wins once before a loss on the next bet. If the “player” bet doesn’t win, it may be back to “banker” again.

“Players do so much trend analysis in such a short amount of time they should all be working for a hedge fund,” said Snow, who created an optional side bet for baccarat called a ‘Dragon Bonus’ that adds the equivalent of a jackpot to boost excitement for the game. “It’s amazing the level of detail these players demand of the game.”

Streaks in the game adds to the drama. Gamblers tend to believe that streaks — when the same numbers are randomly drawn again and again — are rare although they occur with some frequency, said Frank Martin, a mathematician and gambling analyst.

A streak of eight in a row should happen 50 percent of the time in only 400 flips of a coin, which would be roughly equivalent to a session of baccarat, Martin said. Still, long streaks are considered extremely unusual by most players, who instead believe the cards are falling their way. Such players will wager on the same outcome because they feel “lucky” rather than because it’s mathematically probable.

Baccarat players commonly tell stories about epic winning streaks at the tables resulting from betting on patterns of favorable “banker” or “player” positions.

•••

O’Hair has several gambling stories of his own, including a windfall when he and a Korean gambler bet on a pattern of three consecutive “banker” wins followed by three “player” hands, followed by a series of similar consecutive wins.

“We won thousands that day,” he said.

Like many gamblers who are financially successful in life, O’Hair is driven by a blend of left- and right-brained motivations.

He has a mind for numbers, rattling off odds for various casino games and a method for tracking cards in blackjack, which he also plays along with poker. He has a money management strategy for gambling that avoids chasing losses, which he has witnessed other gamblers pursue at their peril.

Because the casino margin on baccarat is less than other games, “you can play for hours and not lose much money,” O’Hair says — though rich table limits and irresponsible bets can quickly drain big bankrolls.

But losing does have its perks, O’Hair says: Casinos also tend to comp rooms, drinks and other amenities for losing baccarat players at a better rate than most other casino games.

O’Hair doesn’t come across as a mystic. Medicine is a pragmatic field, after all.

He knows baccarat is a random coin flip. Yet he is drawn to the undeniable allure of win-loss patterns so compelling that some players have given them spiritual-sounding names, such as “big whale” or “little fish.”

When O’Hair talks about such patterns, he sounds like he is tapping an otherworldly presence.

“Everything happens in trends. You’ll never get a heads, tails, heads, tails, heads, tails. It moves in a wave form.”

While the Internet brims with baccarat strategies as seemingly infinite as the patterns they aim to detect, O’Hair’s technique is simple.

“I play it by feel,” he said. “I wait to see if there’s a pattern, pitch some cards out and get a feel for whether it’s going in the direction of ‘banker’ or ‘player.’

•••

Some baccarat players “will never believe” game outcomes in baccarat are random no matter how many times they are told, said Michael Shackleford, a Las Vegas casino consultant and mathematician who devises math formulas underlying slot machines and table games, including variations of traditional baccarat.

Unlike blackjack, where players can change their odds by tracking the value of the cards or by playing them differently, baccarat outcomes are predetermined. Though those outcomes also are random, players have the heightened sense that they are yielding completely to the luck of the draw — their destiny already sealed in the order of the cards after they are shuffled and stacked, and before they are drawn for play.

In particular, the Chinese frequently view otherwise random events as good or bad omens or part of a bigger pattern of life occurrences, said Shackleford, whose wife and mother-in-law were born in China.

The submission to the luck of the draw in baccarat is especially compelling in Asian culture, which views luck at the gambling tables as an indicator of self-worth and success in life rather than simply a pleasant surprise, said Dr. Timothy Fong, co-director of UCLA’s Gambling Studies Program.

Some Asian players think “if they win, it’s going to mean they’re a good person,” and not simply the beneficiary of random chance, said Fong, who helps treat compulsive gamblers, including baccarat players who will pursue wins — and personal affirmation — at any cost.

A gambling win may also be viewed as a blessing from dead ancestors bestowing fortune on the living, he said.

Conversely, the game’s emotional pull can backfire for losing players, who often feel they “deserve to be punished” or are “morally bankrupt in some way,” Fong said.

That players sitting around the table typically follow one another in betting the same way against the house also plays into an Asian way of seeing the world as a collective unit, with opposing forces balanced against one another, he said.

Some players may not discuss the game so philosophically. Still, experts say players tend to take baccarat more seriously than other casino games.

Fueled by copious notes, players are driven by a belief they can “crack the code” and thus, beat the casino at their own game, said Snow of ShuffleMaster. “It’s a war against the casino — and the spoils of war are chips.”

For the Asian businessman, the baccarat table becomes a workplace rather than a place of mild amusement, said Fong, whose center analyzes gambling as a cultural phenomenon.

Born into a culture that values hard work and financial success, Asian players apply the same work ethic that yields monetary wealth in life to gambling, he said.

“They think, `If I can figure out how to succeed in business, I can figure out how to beat this game,’” he said. “‘Work’ is a term gamblers will use — ‘If I keep working at it, the payoff will be great.’”

•••

O’Hair is drawn to the game for other reasons, and “work” has nothing to do with it.

Drawn by the game’s luxury trappings, O’Hair began playing baccarat in the early 1990s during a skiing trip at Lake Tahoe — a few years after gambling in a casino for the first time. The high-limit room and dealers in bow ties gave the experience a “James Bond” feel that was far superior to bumping elbows with the masses outside, he says.

“There’s something cool about the energy in the room” when players sitting around the table bet on the same position in baccarat, he adds.

Like other players with high-stress jobs who flock to baccarat, O’Hair feeds off the tension in the room and bets aggressively in the heat of the moment. Playing baccarat, then, is not a relaxing diversion.

“You’re in this back room with people who are serious about their money,” he says. “It gets intense.”

While Las Vegas casinos have been winning a disproportionate amount from baccarat in recent months, the game remains a risky proposition, as wins or losses from a handful of big players can skew the bottom line, said Bill Zender, a table games consultant and former casino executive in Las Vegas.

“It’s always been a big money game apart from the others,” he said. “But we can’t rely on baccarat because there’s too much fluctuation in the game — and the Chinese government could decide one day to shut off travel visas” for its citizens.

By himself, O’Hair’s frequent trips to Las Vegas from Rhode Island, where he owns a medical clinic, may not be boosting casinos’ bottom line. Falling somewhere between local Asians who play as little as $10 per hand and whales who wager up to $200,000 at a pop,

O’Hair describes himself as a middle-of-the-road player who wagers $100 on up into the thousands of dollars, and

claims to be breaking even after years playing baccarat. He’s nearly spent through a windfall earned several years ago.

At this very moment, money management seems far from O’Hair’s mind as he grips his next card and bends it upward.

A cocktail waitress sets a glass of top-shelf vodka at his side, which will have to wait until the next pattern reveals itself.

Gambling isn’t everything, he admits afterward.

“There’s an ‘X’ factor,” he says. “If (the dealers) didn’t wear black ties, I don’t think I’d play the game.”

CORRECTION: This story was corrected to say gamblers can expect to lose $1.10 for every $100 they bet in baccarat. It originally said gamblers can expect to lose $1.10 for every $1 they bet. | (November 26, 2010)

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  1. The Hard Rock game shown in the photo is mini-baccarat.

  2. "Although the house edge for unskilled blackjack players is 2 percent, baccarat has a house edge of 1.1 percent, meaning players can expect to lose $1.10 for every $1 they bet."

    That would be a bad game to play. Actually, it's "players can expect to lose $1.10 for every $1oo they bet."

  3. Jack Rabbit and ByeByeLV:
    The story was changed from $1 to $100 after the error was posted. Check out the paper copy of the Sun if you are still dubious.

  4. I'm sure they'll be lowering the odds on baccarat now to give the house a bigger advantage.

    Or will they just tack on a 'baccarat fee' to every hotel guest?

  5. There is no Recession for the rich. That means that my neighbor, who works in a high-end restaurant, can afford a new sports car, which means that the State Budget Deficit got reduced by the sales taxes and license fees he paid. Every little bit helps bring our one-horse Las Vegas economy back.

  6. I wonder if a truly honest man or woman ever sat at a high roller baccarat table?
    At least at the nickel and quarter slots, one can still experience the excitement of gaming without reminiscing about all the people you had to cheat to become mega-rich.

  7. "the dealer, whose table requires a minimum bet of $25,000 and allows a maximum bet of $300,000."

    MONKEY!MONKEY!MONKEY!
    3 max-bet losing hands + tips = 1 million dollars...
    BANANAS!!!

    "News media recently reported losses of $115 million by two big baccarat players in Singapore, where its first two casinos opened this year."
    ...and they were deemed "morally bankrupt", rather than financially so...shamed by their random bad luck...

    INSANITY.

  8. One of the salient reasons why the wealthy need more and more tax deductions and reductions is so they can pay their gambling debts and still afford buy a new Porsche to sooth the pain when they get home.

  9. It's true. The odds are much more in the player's favor than on games such as b-j or perhaps 3-card poker. The switch from 3-2 b-j to 6-5 b-j could have helped the tendency that more players are playing this game. I also notice that there are more players on the mini baccarat tables these days. The game is slower than b-j and if you don't bet every hand, you get the kind of entertainment you want, free cocktails and you are also being comped generously. Not the worst game, if you think about. A game that has something between 1.06 and 1.2 per cent house edge is definetely better than a game that takes 3 per cent or so.
    I never get it that in Vegas double zero roulette is played by people that otherwise resist playing 6:5 bj, but perhaps it's a different kind of gamblers....and then they don't even think of the difference between baccarat and roulette, although it's 5x the better game to them ....

    From Switzerland