A case brought by international casino operator Las Vegas Sands Corp against two of its customers has uncovered the covert world of high stakes Chinese gambling that operates on credit.
Last year, when Sands was unable collect gambling debts worth $6.4 million from Chinese high-rollers Xiufei Yang and Meie Sun, the company decided to file criminal charges against them. This however resulted in the two women’s attorneys responding with a surprising allegation.
According to the law firms representing the defendants, Yang and Sun weren’t high rollers but housekeepers who had been hired by Sands employees to take credit lines from the casino on behalf of others. By doing this the real players were able to play without leaving documentary evidence.
The attorneys Kevin Rosenberg of Lowenstein & Weatherwax LLP and Jeffrey Setness of the law firm Fabian VanCott are charging Sands of violating anti-money laundering regulations that prohibit casinos from hiding player names from the books. They claim that the women are at the lowest level of a group that caters to wealthy Chinese and helps them in gambling anonymously. The attorneys stated that since the women weren’t the real players they cannot be held accountable for the debt.
Sands spokesman Ron Reese called the defense a smokescreen and said there was no clear evidence that Sands employees had hired the women to front other players. He further added that regardless of the arrangement, the two individuals were responsible for the debt since they signed for it. However after the defense attorneys filed their counter allegation, prosecutors dropped the criminal charges and will now be pursuing it via a grand jury.
According to Las Vegas agents, industry executives and casino floor employees, such fronting practices are commonly used at some casinos. The case highlights the importance and prevalence of Chinese gambling in the Las Vegas’ gambling market, as casinos on the Strip continue to woo wealthy Chinese with attractive benefits and exclusive services like VIP rooms.
Baccarat gambling has doubled over the previous few years growing to over $1.3 billion. Marketations a casino consulting company states that Asians account for 90 percent of the baccarat gambling in Vegas and account for 75 percent of the high roller market operating in the Vegas. However a typical characteristic of the Chinese segment is that the players gamble on credit as the sums wagered are large. Sands Corp filings show that two-thirds of all table debts are borrowed from the house. Several players use shills or stand-ins to get additional credit after suffering a losing streak.
U.S. regulatory authorities have been increasing their scrutiny over the US casino industry in order to prevent gamblers from using the casinos as a conduit for money laundering.