Published October 18, 2008
Slippery side-bets that hurt casinos
By LEE U-WEN

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IT is not just the shadow of a downturn that the casinos have to ward off. It is also the spectre of side-betting. This practice is rampant in Macau, often carried out right under the nose of the casinos, and yet they are helpless to staunch the massive revenue haemorrhage.
Industry estimates have suggested that side-betting - more commonly known as under-the-table betting or parallel betting - has cost Macau casinos over HK$100 billion (S$19.1 billion) in winnings and HK$40 billion in tax revenue over the past five years.
How it works is simple, yet devious. The most common forms of side-betting are when junket operators - middle-men who bring high-rollers to casino VIP rooms and give them credit to play with - quietly bet with these gamblers on the side, based on what happens on the actual casino tables.
So a gambler may bet, say, HK$10,000 in chips with the casino. But he might have a 'side-bet' with the junket operator for US$10,000. This means that while the casino sees just HK$10,000 change hands, the gambler is, in fact, betting to the tune of HK$88,000 - the bulk of it with the junket operator - while using the facilities of the casino.
In some cases, the junket operator is even sitting at the same table as the gambler, and taking note of each game played and the bet in each round. The two parties will then settle the outstanding amounts owed to each other when they get back to the mainland.
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The benefits to the gambler are two-fold. He typically gets better odds for his side-bet with the operator - who has no overhead expenses, unlike the casino - giving him higher returns than if he were to bet the entire sum with the casino. Also, the gambler gets to enjoy the perks of being a high-roller, such as free food and alcohol, expensive cigars, transport to the casino, free stays at the hotel's suites, and so on.
Why Macau's casinos are so keen to clamp down on side-betting is that it removes their take from the total bet amount, as well as the 40 per cent government tax, leaving all the revenue in the hands of the players and operators.
The director of the Macau Gaming Inspection and Co-ordination Bureau, Manuel Joaquim das Neves, told the Macau Daily Times earlier this year that it is impossible to prove when side-betting is going on. 'We take some measures with the Judiciary Police, but nobody tells if they are taking side-betting, so it's impossible to prove it. If I go with you to a casino and bet with you according to the result of the table, nobody knows if you don't tell,' he pointed out.
Could side-betting find its way into Singapore's IRs when they eventually open? It may be too early to tell, but it's perhaps a given that the managements of both resorts will be keeping a close watch on junket operators and doing all they can to minimise this revenue leakage.