Small Vegas Casino Aims to Entice VIP Gamblers With "Rolling Chips"

By Billy Duberstein Markets Fool.com

The Lucky Dragon is a brand-new Asian-themed casino located on Sahara Avenue, north of the main action on the Las Vegas strip. For you Vegas fans, it's to the north of the Encore, across the street from the SLS, and close to the Stratosphere.

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Despite the casino being only three months old, a mere 27,500 square feet with 203 rooms (small by Vegas standards), and a ways off the main part of the Strip, this little casino is already making big headlines. VitalVegas.com said the casino "absolutely crushes it." Catching some attention is the Lucky Dragon's VIP program, which could influence how VIPs are treated at other casinos in Vegas.

Image source: The Lucky Dragon.

High rollers

VIP guests are important to a casino's bottom line, and thus casinos often give perks based on how much a high roller plays.

Traditionally in Vegas, a pit boss or casino executive is responsible for monitoring VIP play. This very important employee watches how much high rollers bet on average and how frequently they play, then offers discounts and comps based upon their judgment. This is obviously an imperfect process, and sometimes benefits either the casino or the players more than was deserved.

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However, in recent years, casinos in Macau began using a technique called rolling chips, rather than human referees, to monitor VIP play.

What are rolling chips?

The way rolling chips are being used at the Lucky Dragon is this: When high rollers come to the table and bet at least $10,000, they are each given a stack of "dead chips." When the VIPs win hands, they are rewarded with "live chips," with which they can play elsewhere, or redeem for cash. If the players lose all their dead chips, they can use live chips to buy more dead chips.

While this may seem like a trivial change, the practice results in a much more accurate accounting of each player's win/loss ratio and how much they've played. Since the players know that they will be fairly compensated based on their play, the technique has reportedly been very popular with VIP players. Lucky Dragon COO Dave Jacoby has said that the VIP interest in the new casino has exceeded expectations, and the casino is relocating a restaurant in order to add another VIP room.

The Lucky Dragon's popularity might also have to do with the fact that the anticorruption campaign in China has driven Chinese high rollers to Vegas. In fact, Hainan Airlines' first nonstop flight from Beijing to Las Vegas occurred the same day the Lucky Dragon opened its doors. Lucky Dragon bills itself as a "boutique-style casino resort designed to create an authentic Asian cultural/gaming experience."

While the Lucky Dragon is currently private, casino-stock investors should monitor rolling-chip adoption at their companies as casinos try to please high rollers and attract Chinese gamblers. They should also keep an eye on this upstart casino for its competitive threat, and possible status as an acquisition target.

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