Billions to be made fishing for China’s gambling ‘whales’

If you’ve got $10 million you are willing to lose at baccarat or roulette, step this way.

That, according to industry sources, is the starting price for the “whales’’ hunted by casinos. They’ll be offered a private jet, put up for free in deluxe suites and villas, and plied with food and drink just as long as they keep playing the tables.

In newly built private gaming salons at Crown casinos in Melbourne and Perth, and at Sydney’s The Star, rich gamblers and their entourages can bet staggering amounts against the house, out of sight of the public. And then there’s the even more exclusive high-roller venues, such as the Mahogany Room, where players can bet up to $300,000 a hand.

Australia’s two main casino groups — Crown Resorts and Star Entertainment — have spent hundreds of millions of dollars setting up facilities to cater to a market that has ballooned with the rise of China’s economy. The Star bought a third jet, a Bombardier XRS, for $50 million last year. Two years ago Crown paid $100m for three Bombardier Global Express jets to ferry the whales to and from its Australian properties.

James Packer’s entire $2 billion Barrangaroo tower development on Sydney Harbour is aimed at catering to the multi-millionaires and billionaires coming out of the fast-growing Asian region.

The stakes are huge. In 2015-16 high rollers wagered a staggering $114.6bn across VIP tables at Crown and Star, delivering $1.3bn in combined revenue.

A veteran casino executive speaking on condition of anonymity said the big numbers reflected the whales’ preferred game of baccarat. “It has the highest ­return to player so the win rate for the casino is very low and the house needs a lot of turnover to justify offering the game,’’ the executive said. “If the win rate moves one way the casino can lose millions, but it can also win millions if it moves the other way.’’

Australia has done disproportionately well out of a three-year corruption crackdown in China, according to Andrew Scott, chief executive of Macau-based magazine Inside Asian Gaming.

President Xi Jinping’s crusade has sent hardcore gamblers scurrying to other countries, but Australia’s proximity, time zone and standing as a favoured study and holiday destination for the children of wealthy Chinese has given it a leg up. “A lot of casinos around the world have done well out of the crackdown, but the Australian casinos have been greatly helped by their marketing efforts in China,’’ Mr Scott said.

The Star’s high-roller turnover jumped 97 per cent to $22.3bn in 2013-14 — the first year of the corruption crackdown — and doubled again in the following two years. To get around restrictions on moving money out of China ­entirely new industries have been created, including junket operators who arrange betting on credit on behalf of wealth gamblers or split the revenue generated by the whale with the casino. Star paid $117.3m in rebates and commissions in 2015, falling to $89.6m in 2016.

But the reliance on third-party operators could be expensive because gambling debts cannot be legally enforced in China, making it difficult to recover money from losing players.