Are you familiar with the casino chips system?
MANILA, Philippines – When a lone gunman fired shots and set gaming tables on fire at Resorts World Manila in Pasay City last week, police downplayed the possibility of a terrorist attack, saying robbery was the motive behind the incident that left 37 people dead.
But if robbery was the sole motive, why did the gunman steal casino chips instead of cash?
The logical place a robber would have targeted was the cash cage or the casino cashier, where customers could exchange cash for chips before playing, and where they could encash their tokens after a gaming session.
But the gunman – later identified as former finance department employee Jessie Javier Carlos – instead entered the chip bank room and stole high-value chips worth P113.1 million ($2.3 million). He later left them inside a backpack near the stock room. (READ: TIMELINE: Resorts World Manila attack)
In the early hours after the attack, National Capital Regional Police Office chief Director Oscar Albayalde pointed out that even if Carlos had stolen millions worth of casino chips, he would have had no way of encashing them – that is, without raising suspicions.
What’s with the chips anyway and how do they work in a casino?
Perks for high rollers
Casino players are classified into common gaming area players, high rollers who are often brought in by “junket operators”, and VIPs (Very Important Persons) who sometimes engage in long-distance proxy betting.
Most of the chips are made in China and are issued in various denominations – P25, P100, P500, P1,000, P10,000, P50,000, and P100,000. These amounts are often distributed to regular players and high rollers or VIPs in the form of chips.
VIPs get chips that are worth P500,000 to P1 million each and get to play in exclusive VIP rooms with proxies if they so prefer. They are not allowed to use their high-end chips from the VIP rooms in the common gaming areas operated by the casino owner.
High rollers' trips to casinos are often organized by casino junket operators who get their passports a week or two before their trip and register them with the Philippine Amusement and Gaming Corporation (Pagcor).
Under the junket operators are agents who make contact with the gamblers themselves, luring them into participating in the casino junket.
A high roller refers to a person who “wagers massive amounts of money” in high-stakes games. While ordinary players can spend from P2,000 to P5,000 in game tables, high rollers usually spend a minimum of P40,000 up to even P1 million in one night.
According to Bloomberg, bets from high rollers reached at least $27 billion in Philippine casinos in 2016 alone. Because of the huge amount of money they contribute, high rollers are often given special treatment.
Aside from playing in a different area from the “ordinary players”, they are treated to “special comps” or gratuities such as free drinks, accommodations at the hotel’s finest rooms, and in extreme cases, even free airfare.
Operators and agents guarantee the best treatment to high rollers while also ensuring a large income to the casino establishment. Aside from the perks they offer, casino junket operators sometimes lend money that patrons can use to play.
High rollers are usually also issued dead chips, or non-negotiable playing chips. These are used for playing only and cannot be exchanged for regular chips or cash.
When a person wins using dead chips, he is given cash chips – winnings from the betting table – which can then be encashed within the vicinity of the casino.
Asian and Australian casinos often use this system to lure high-end players. Players can get a bonus, refund, or discounts when purchasing large amounts of dead chips from junket agents. Operators also earn from the volume of dead chips they sell, like in Macau.
Depending on the agreement with the junket operator, the player may also be required to keep playing a certain number of times so that the operator can receive a commission based on the total value of the dead chips.
Former Pagcor official Eugene Manalastas said during a Senate probe into the Bangladesh Bank heist in March 2016, dead chips are the "most monitored."
Junket operators clearly benefit from the set-up. Here, they earn from the business by sharing their earnings from a specific junket with the casino establishment – they collect about 10% of the gross gaming revenue after deducting a 5% franchise fee, a source familiar with the gaming industry said.
In 2016, Kam Sin "Kim" Wong explained that his company Eastern Hawaii Leisure Company Limited, a VIP operator, often got 47.5% of the earnings while Solaire Casino got 52.5%. While Solaire took care of tables, taxes, and licenses, the VIP operator bankrolled everything else.
The earnings of agents, meanwhile, depend on the players’ bets. The higher the bets they place, the bigger commission agents get, regardless if they win or lose.
For sure, the "dead chips" system has its dark side too.
Global anti-money laundering body Financial Action Task Force (FATF), in a report on gambling, warned that dead chips are often the instrument of choice of criminals – specifically money launderers in Hong Kong and Macau – as these are difficult to detect in cross border movements.
Dead chips, the report said, are "particularly ripe for exploitation by loan sharks often with a triad element."
So-called "dead chip syndicates", often under the guise of junket operators, exploit victims to gamble more than they can afford, providing them with dead chips, pushing them deeper into huge debts they are unable to pay.
According to authorities, Carlos was a high roller who usually placed a minimum bet of P40,000.
If Carlos was considered a high roller, was he a patron of several casino junket operators who had something to hide? – Katerina Francisco and Jodesz Gavilan/Rappler.com