The Formation of Macau's Gambling Oligopoly: The Game of Ho Hung Sun, Henry Fok, and Geopolitical Balance

Your feeling that they are "a bit run-down" is very intuitive and accurate. This feeling mainly stems from the aesthetic generation gap, spatial limitations of the buildings, and the shift of Macau's luxury center.

Currently, the positioning of these two hotels in Macau is still clear, but they have transformed from "avant-garde luxury" to "classic nostalgia" and "old-money heritage".

Current Specific Positioning:

1. Hotel Lisboa (opened 1970): A living historical fossil and nostalgic landmark
Its positioning is no longer about modern "top luxury", but rather a symbol of Macau's 20th-century gaming industry. It marks the starting point of Macau's modern gaming industry. Its highly dated "birdcage" exterior and old-fashioned decor mainly attract tourists who want to experience the old Macau style and seek nostalgia.

2. Grand Lisboa (opened 2008): The peninsula's luxury flagship and "top culinary temple"
Grand Lisboa's current positioning is the "old-money" representative of the Macau peninsula. Its moat for maintaining a high-end position is no longer room hardware, but exquisite dining and collections. It boasts the most Michelin-starred restaurants in Macau (such as the three-star Robuchon au Dôme and The Eight). Its core competitiveness lies in heritage and extremely refined taste experiences, rather than modern living comfort.

Why does it feel "a bit run-down" or outdated?

1. Architectural aesthetics and era limitations
These two hotels were born in the 1970s and early 2000s respectively. The luxury standards of those eras were large areas of gold plating, intricate crystal chandeliers, heavy red carpets, and wood carvings. This dense "bling" aesthetic, viewed through modern eyes accustomed to transparency, modern structuralism, and minimalist design, not only feels oppressive but also magnifies the traces of age.

2. Structural flaws in space
They are located in the crowded old town of the Macau peninsula. The buildings were limited by the land area and engineering technology of the time, resulting in relatively cramped interior ceiling heights, corridor widths, and room layouts. They cannot match the vast indoor plazas or visually striking modern spaces of the newly built resorts in Cotai.

3. Overall southward shift of the luxury business district
Over the past decade, Macau's luxury center has completely shifted to the Cotai Strip. New-generation hotels like The Londoner, Wynn Palace, and Morpheus are products of a different era in terms of architectural appearance, technology application, and immersive experience. With these highly modern new benchmarks, the "twin Lisboa" in the old town naturally appear aged.

4. Undergoing renovation pains
In fact, SJM officially recognizes the shortcomings of aging hardware. Currently (2024-2026), both hotels are undergoing large-scale phased renovations. Hotel Lisboa plans to launch over 400 fully renovated rooms in the second half of 2026, and Grand Lisboa is also restructuring its room inventory and dining spaces. The construction and transitional state in some areas may also exacerbate the "run-down" impression.

If you value modern architectural structure, cutting-edge living experience, and wide views, SJM's current modern flagship is actually the Grand Lisboa Palace in Cotai. However, from the perspective of exploring the rise and fall of a city's industry and historical changes, these two old buildings on the peninsula remain excellent physical archives for observing Macau's era transitions.

Macau's history is a very unique story of geographical evolution and spatial transfer of capital and power. The "run-down" and "new" you feel are essentially products of these two areas under different historical dynamics.

Let's break down these two areas:

1. Macau Peninsula (Old Town): 400 years of time folds

The Macau peninsula is the "root" of Macau. Its historical logic is organic growth from points to surfaces.

• Trade fulcrum during Ming and Qing dynasties (1553-1840s):
  The Portuguese first landed near A-Ma Temple. The early old town was a mix of European medieval defensive towns and Lingnan fishing villages. The Ruins of St. Paul (Collegiate of St. Paul) was the first Western university in the Far East. This history gave the old town its narrow, winding street texture—designed for defense and natural ventilation, not modern traffic, which is why traffic in the peninsula is extremely congested today.
• Foundation of the gaming empire (mid-20th century - 2002):
  In the 1960s, "gaming master" Ye Han and later Stanley Ho won the gaming concession. The opening of Hotel Lisboa in 1970 marked the peninsula officially becoming Macau's power center.
  At that time, the peninsula was "unipolar". All prosperity was crowded around Nam Van Lake and the new port area. The building density on the peninsula is extremely high, with land mostly reclaimed in small phases, lacking unified planning. The "run-down" you see is because it bears the burden of overpopulated areas, aging drainage systems, and the aesthetic remnants of the late 20th century.

2. Cotai Strip: From "shoal" to "man-made miracle"

The historical logic of Cotai is completely different; it is a product of top-level design, massive capital injection, and one-step completion.

• Creation of a geographical concept:
  The term "Cotai" is a combination. Originally Macau had only Taipa Island and Coloane Island, with a shallow sea area called "Cross Gate" in between.
  In the late 1960s, due to siltation, a "Taipa-Coloane Causeway" was built between the two islands. In the 1990s, the government decided to completely reclaim the sea area between the two islands, forming the Cotai Reclamation Zone (Cotai Strip).
• The "Big Bang" of 2002:
  This was a watershed moment in Macau's history. The SAR government liberalized gaming concessions, implementing a "three-way split" (later evolved into six). At that time, the peninsula had no land left to accommodate large-scale integrated resorts like those in Las Vegas.
  Cotai became the only virgin land. In 2007, The Venetian Macao opened on the barren reclaimed land of Cotai, completely changing the rules.
• Logic of spatial politics:
  Cotai's development skipped the "street" stage and directly entered the "super block" stage. Each hotel here is a closed-loop miniature city (cinemas, shopping malls, casinos, theaters). It pursues grand narratives, symmetrical aesthetics, and modern transparency.

Summary: The confrontation of two powers

You can understand the relationship between the two as:

• Peninsula old town is a "complex system of historical accumulation". It has a lively atmosphere, real communities, but also fatigue after capital withdrawal. Hotel Lisboa and Grand Lisboa, as old overlords of the peninsula, guard Macau's "dragon vein" and traditional interests.
• Cotai is a "landscape of precisely calculated capital". It has no historical baggage; it is built entirely for efficient consumption and sensory stimulation. This is the arena where global capital (Sands, Wynn, MGM) competes with emerging capital (Melco, Galaxy).

This sense of fracture between "run-down" and "new" is essentially the physical imprint left by the transition from an "old Far East Portuguese town" to a "world tourism and leisure center", as old and new driving forces shift. The "run-down" of the peninsula old town is the patina left by time, while the "new" of Cotai is a dream built by modern industry and capital.

This is a very incisive economic and historical question at the core of Macau's gaming industry. To clarify these three questions, we need to follow the historical logic, starting with "why concessions were established", then "why a monopoly", and finally "why Stanley Ho won".

1. Why were "gaming concessions" (franchises) established?

The essence of establishing concessions is for the government to legalize and centralize the gray industry, thereby maximizing tax revenue and establishing governance.

1. Ending the black-market era of warlord fragmentation: Before 1930, Macau's gaming industry was extremely chaotic. There were large and small underground casinos everywhere, controlled by different gangs and local forces. The government not only collected no revenue but also bore high public security costs.
2. Government's "money bag" need: The Portuguese colonial government in Macau was very financially strapped. In 1930, the government decided to adopt a "concession" (gaming license) system. This meant: only the holder of this license could legally operate casinos in Macau; in exchange, the licensee had to pay a huge "concession tax" to the government.
3. Using concessions for infrastructure: The Portuguese government was clever; they not only wanted money but also required licensees to undertake many social functions. For example, licensees were required to dredge waterways, build docks, and provide ferry services. By issuing a single piece of paper (the concession), the government directly solved the funding problem for urban infrastructure.

2. Why let a few companies have a "monopoly/oligopoly"?

From an economic and governance perspective, gaming is an extremely special industry that cannot be a perfectly competitive market.

1. High regulatory costs: The gaming industry is naturally prone to serious crimes like money laundering, loan sharking, and organized crime. If hundreds of companies were allowed to compete freely like restaurants, the government would not have enough police and audit resources to regulate. By controlling it within a few giants, the government only needs to monitor the accounts and compliance of these few companies.
2. Moat and capital threshold: Today's gaming industry is no longer just about a few tables. The super resorts in Cotai require tens of billions or even hundreds of billions of US dollars in initial investment. Only by giving operators high profit expectations through "license restrictions" would giants dare to invest heavily in building mega hotels, shopping malls, and convention facilities. Without the protection of oligopoly profits, Macau's urban landscape today would not exist.
3. Tied "cash machine": Macau's government revenue is extremely dependent on gaming taxes (at peak, accounting for over 80% of total government revenue, with a tax rate close to 40%). Only by allowing these companies to earn excess profits can the government extract huge tax revenues and then distribute welfare, build hospitals, and provide free education to all Macau citizens. This is a symbiotic relationship between government and capital.

3. Why was Stanley Ho able to win so many concessions?

A common misconception needs correction: before 2002, Stanley Ho did not have "many" concessions; he held only one monopoly concession. After the liberalization in 2002, Macau had 6 concessions (3 main and 3 sub-concessions), and the Ho family controlled 3 of them (SJM, MGM China, Melco).

His ability to win concessions can be divided into two stages:

Stage 1: Winning the monopoly in 1961 (relying on vision and political-business alliances)
At that time, the previous "gaming king" Fu Rong family had controlled Macau's casinos for 24 years, with deep roots. Stanley Ho managed to unseat them not because he was wealthy himself, but because he formed an invincible "dream team":

• Ye Han (technical expert): Knew gaming techniques and casino management best, understood the pain points of the previous gaming king.
• Stanley Ho (diplomacy and PR expert): Born into a prestigious Hong Kong family, fluent in multiple languages, extremely skilled at negotiating with high-level Portuguese officials.
• Henry Fok (funding and credibility expert): This was the real game-changer. Henry Fok had a very high status in the Chinese business community at the time. Fok proposed that all profits from the casino, except for reinvestment, should be used for Macau's charity and urban construction.
  This grand narrative of "using the casino as a tool for Macau's infrastructure" instantly outclassed competitors who only wanted to make money. The Portuguese government decisively awarded the only gaming concession to Ho's STDM consortium. Thus, Stanley Ho began a 40-year monopoly.

Stage 2: The Ho family taking half of the concessions in 2002 (relying on deep roots and capital balance)
In 2002, the SAR government, to break the stagnation of STDM's monopoly, introduced competition by splitting the concession into three (later six). Why could the Ho family still take half?

1. Local power base: SJM (Stanley Ho's flagship) employed a large proportion of Macau's local population at the time. To ensure social stability and employment, SJM not only had to get a license but also maintained the largest number of casinos in Macau (mainly on the peninsula).
2. Balance of power in great power games: The liberalization introduced US capital giants (Sands, Wynn). To prevent US capital from completely controlling Macau's economic lifeline, the government and Beijing wanted strong Chinese capital to counterbalance.
3. Business acumen of the second generation: Stanley Ho's children were very capable. Daughter Pansy Ho (representing Shun Tak Holdings) formed a strong alliance with MGM to win a sub-concession; son Lawrence Ho took over Melco, partnered with Australia's Crown (later bought out shares to control independently), and won another sub-concession. They leveraged the family's deep political and business connections in Hong Kong and Macau, combined with international management experience, to successfully establish themselves in the new oligopoly era.

In summary, the gaming license system is a product of compromise between political governance, capital power, and urban development. The Ho family's enduring success in this arena relies on deeply binding their commercial interests with government demands (whether infrastructure needs in the early days or capital balance needs later) at critical historical junctures.

These three questions are interlinked, directly addressing the business model, historical grudges, and macroeconomic logic of the gaming industry. Let's break them down one by one:

1. What is the significance of the number of casinos? Why not build one giant casino?

Your idea of "building one giant casino" is exactly the modern commercial real estate model adopted later by US Las Vegas capital (like Sands, Venetian) in Cotai. However, in the early days and on the peninsula, maintaining a "large number, scattered" casino layout had very practical political and economic considerations.

1. "Satellite casino" model and profit sharing:
   At its peak, SJM (Stanley Ho's flagship) had over 20 casinos, most of which were "satellite casinos". This meant: SJM held the concession, but did not build the buildings. Some powerful real estate developers or gang leaders built their own hotels and then "affiliated" under SJM's concession to operate casinos, sharing profits.
   • The logic: This was a political wisdom of "sharing benefits". By distributing the operation rights of satellite casinos, Stanley Ho tied all the local landlords, gang forces, and capital in Macau to his own interests, forming an unbreakable local base.
2. Geographic and physical space limitations:
   In the early days, the Macau peninsula relied entirely on land reclamation, with every inch of land precious. There was simply no large enough plot to build a "giant". Casinos could only be inserted into limited commercial buildings.
3. Customer segmentation and risk diversification:
   Casinos in different locations had different positioning. Some focused on high-end VIP rooms, emphasizing privacy and luxury; others were near the pier and border gate, targeting low-end customers and high turnover. Multi-point layout allowed harvesting customers of different classes and routes comprehensively.

2. How did Henry Fok get involved? Does he still have interests now?

Henry Fok was not just involved; he was the key "game-changer" in Stanley Ho winning the monopoly in 1961.

1. How did he get involved? — Recruited as a "credit endorsement"
When bidding for the concession in 1961, although Stanley Ho and Ye Han were knowledgeable, in the eyes of the Portuguese government and the public, they were just businessmen wanting to make money.
To win, they recruited Henry Fok, who had high prestige in the Hong Kong and Macau Chinese community, strong financial resources, and very good relations with Beijing. Henry Fok himself actually disliked gambling. His only condition for joining was: the consortium should not treat the casino as a pure cash machine, but must commit to using the vast majority of profits for Macau's urban construction, charity, and infrastructure (dredging waterways, building docks).
It was this grand narrative of "non-profit/infrastructure building", combined with Fok's financial strength and credit endorsement, that instantly defeated the old gaming king family and won the concession. Together they established the Macau Tourism and Entertainment Company (STDM).

2. Does he still have interests now? — Still the real "controller" behind the scenes
Yes, and it's decisive.
Later, Henry Fok and Stanley Ho had serious disagreements over profit distribution and development philosophy (Fok believed Ho violated the promise of "using profits for infrastructure" and enriched himself), and they drifted apart. In 2002, Henry Fok donated all his STDM shares to establish the Henry Fok Foundation in Macau.
Current power structure: STDM controls the listed company SJM (the current concession holder). The Henry Fok Foundation is one of the absolute major shareholders of STDM.
In the family inheritance dispute after Stanley Ho's death, Pansy Ho (eldest daughter of the second wife) formed a concert party alliance with the Fok family (Timothy Fok, etc.) to gain absolute control of over 50%, firmly holding SJM's control. Although the Fok family does not directly participate in daily casino operations, they have a high voice on the board and huge dividend interests.

3. Why were so few concessions issued? Are there only these few gaming groups in the world?

There are far more gaming groups in the world than these few. Caesars, Hard Rock in the US, and Genting Group in Malaysia are all top global gaming giants. For example, when Macau's concessions were re-bid in 2022, Genting Group aggressively entered with huge capital, trying to snatch a license, but ultimately failed.

Since there are other giants, why does the Macau government strictly limit it to only 6 (currently 6 licenses)? This is the classic "oligopoly and regulatory arbitrage" logic:

1. Artificially creating scarcity to obtain "excess tax revenue":
   This is an economic trade-off: the government limits competition (only 6 licenses) to ensure these 6 companies can earn extremely high monopoly profits. In exchange, the government imposes the world's highest gaming tax (close to 40%). If the market were fully liberalized, price wars would slash casino profit margins, and the government's tax base would collapse.
2. Forcing capital into heavy asset infrastructure:
   The Macau government's goal is to turn Macau into a "world tourism and leisure center". The government imposes hard targets on licensees: to keep this golden goose (the license), they must spend tens of billions on non-gaming facilities (concert halls, art galleries, theme parks, convention centers).
   Only in an oligopoly where no new players can enter would foreign capital (like Sands, Wynn) dare to invest tens of billions of US dollars in building those mega resorts in Cotai. A perfectly competitive market cannot sustain such heavy-asset wonders.
3. Governance costs and national security bottom line:
   Casinos are naturally high-risk areas for money laundering and capital flight. As a special administrative region of China, Macau's gaming industry involves huge foreign exchange controls and national financial security.
   Managing 6 giants, the government only needs to send auditors to monitor their accounts and compliance systems; if there were 60 or 600, regulatory costs would rise exponentially, easily spiraling out of control.

Therefore, the number of gaming licenses in Macau has never been determined by the free market, but by a "political economy extreme value" calculated from Macau's carrying capacity, government fiscal needs, and macro capital controls.

This is an extremely sharp business perspective. In a completely free market economy, if an industry is highly profitable, capital will indeed keep flowing in until profit margins are driven down to the average (near break-even).

But Macau's gaming industry is a market that is highly "planned" and "heavily regulated" by the government. These companies cannot and dare not expand indefinitely. As for why these specific companies won the licenses, behind it is a classic game of geopolitics and capital balancing.

Let's break it down into two parts:

1. Why can't they build indefinitely and compete to break even?

These giants face not only physical and policy "hard constraints" but also, from a return on invested capital (ROIC) perspective, they absolutely do not want to compete away profits.

1. Three "hard constraints" on the supply side (licenses, tables, labor):

• Land bottleneck: Macau's total area is only about 30 square kilometers. The government strictly controls land grants; you can't just buy land and build. After the super blocks in Cotai were allocated, there is no physical space for large-scale new city-building.
• "Table Cap": Even if you build the universe's largest hotel, without government-approved "gaming tables", it's useless. Since 2010, the Macau government has implemented strict limits on the number of gaming tables, with annual increases kept very low. This locks the industry's total capacity.
• Local dealer policy: Macau law requires that casino dealers must be Macau permanent residents. Macau's total population is less than 700,000, and the labor ceiling directly limits the scale of casino expansion.

2. Oligopoly tacit understanding and capital returns:
From an investment logic, gaming is a heavy asset (CapEx of tens of billions of USD), high cash flow business. Once infrastructure is built, the core of maintaining high profits is "increasing yield per table", not blindly increasing supply to engage in price wars. There is an oligopolistic tacit understanding among the six giants: rather than lowering prices to compete for customers, it's better to jointly grow the high-net-worth customer (premium mass) pie. Destroying the industry's moat benefits no one.

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2. Why did these specific giants win the concessions?

When concessions were liberalized in 2002, 21 top global consortia submitted extremely luxurious bids. The ones that stayed were not simply because they had "more money", but because the Macau government (and behind-the-scenes high-level officials) carefully calculated a political and economic puzzle.

The government's core demand was: introduce Las Vegas's advanced experience, but never let US capital completely control Macau's economy; at the same time, ensure a smooth transition for local society.

Phase 1: The "three-legged tripod" in 2002 (initially only 3 licenses)

1. SJM (Stanley Ho family): This was the "stabilizing base". The Ho family employed a large number of locals and had deep roots. Regardless, one license had to be left to them to prevent social unrest.
2. Wynn (US capital): Steve Wynn was the "father of luxury resorts" in Las Vegas. The Macau government desperately wanted him to bring that top-tier, non-gaming luxury experience to Macau, upgrading the city's image.
3. Galaxy Entertainment (Hong Kong capital Lui Che-woo + US capital Sands): This was a "forced marriage" by the government. Lui Che-woo was a Hong Kong construction and hotel tycoon (Chinese capital representative), and Sands Group (US capital boss Sheldon Adelson) was the king of mass-market and conventions. The government wanted a Chinese hardware base combined with US operational software.

Phase 2: The dramatic "one splits into two" (3 licenses become 6, the Ho family's big counterattack)

Shortly after winning the license, Galaxy and Sands, the partners, completely fell out over business philosophy. The government did not want either to withdraw, so it exceptionally invented the "sub-concession" system: allowing Galaxy to "split" a sub-concession to Sands for independent operation.

Pandora's box was opened. Since Galaxy could split, SJM and Wynn naturally demanded the same treatment. Thus:

• Wynn split to Melco: Who is Melco? It is a joint venture between Stanley Ho's son Lawrence Ho and an Australian consortium.
• SJM split to MGM: Who is MGM's partner in Macau? Stanley Ho's most valued daughter Pansy Ho.

This is how the final six giants (3 main, 3 sub) came to be.

Do you see the game of power?
On the surface, US capital giants (Sands, Wynn, MGM) stormed into Macau; but in reality, the Ho family, through extremely clever capital operations, had their children respectively tie up with foreign capital consortia. In the final six licenses, the Ho family still controlled or deeply participated in 3 of them (SJM, MGM China, Melco).

These six companies stayed because they perfectly achieved the strategic balance desired by the higher-ups: introduced top US technology and models, stabilized the local base, and used Chinese capital (especially the Ho and Lui families) to firmly counterbalance US capital's voice.

From the early monopoly to the later oligopoly, this extremely wide "moat" built through franchise rights is rare in most free-competition industries. Do you think if policy loosens again in the future (e.g., at the next license renewal), it would be more beneficial for Macau to maintain these barriers or to introduce new multinational tech capital for more imagination space?

Your observation is very sharp. Regarding the calculation and allocation of "gaming tables", it can be said to be the most core asset management code of Macau's gaming industry. In Macau, a gaming table is not just wood and felt; it is a "special production license" issued by the government, a money-printing machine.

Let's break down your four questions to see the hardcore rules behind them:

1. What is the specific number? The total is welded shut

After the new ten-year gaming concessions (gaming operation contracts) took effect in 2023, the SAR government imposed unprecedented "hard targets" and "iron caps" on the number of gaming tables.

• Total cap for all Macau: strictly controlled within 6,000 tables.
• Before this, the peak number of gaming tables in Macau was close to 6,800. That is, the government used the re-licensing opportunity to forcibly reduce industry capacity, thereby forcing gaming companies to develop non-gaming businesses (such as concerts, conventions, etc.). In addition to these 6,000 tables, the total cap for slot machines was also limited to 12,000 units.

2. How are gaming table limits allocated? Based on "KPI" performance

These 6,000 tables are definitely not evenly divided among the six companies; they are granted by the Macau government's Gaming Inspection and Coordination Bureau (DICJ) based on a complex "comprehensive evaluation system". The main considerations are:

1. Non-gaming investment commitments: This is currently the most core indicator. The government looks at who promises to build more theme parks, host more international concerts, and attract more overseas visitors over the next ten years; those who promise more get more tables.
2. Historical market share and tax payments: Sands (parent of Venetian/Londoner) and Galaxy, due to their huge size and high tax payments, naturally get the most.
3. Allocation pattern: In the current cycle, US capital Sands and Chinese capital Galaxy are firmly in the first tier, each getting over 1,000 or even close to 1,600 tables; smaller companies like MGM and Melco typically get 500 to 750 tables.

3. What counts as a gaming table? Are the tables I see counted?

Not exactly. The tables you see in the casino are divided into two situations in the government's books:

1. Traditional live dealer tables (counted in the 6,000 quota):
   As long as this physical table is equipped with a live dealer and is used for traditional games like baccarat, blackjack, roulette, etc., it firmly occupies a precious table quota. Each such table has a unique government-registered number and electronic tag, and cannot be added privately.
2. Electronic live dealer machines/electronic tables (counted separately or converted):
   You might see a large screen (with a live dealer or machine dealing cards) surrounded by dozens or even hundreds of independent electronic betting terminals. These are called Electronic Table Games (ETGs).
   In regulation, these are not counted as tables per unit; they have specific conversion ratios or are directly classified into the 12,000 machine quota. This is also a way for casinos to "exploit loopholes" to increase efficiency—serving hundreds of mass customers with minimal labor.

4. Since quotas are precious, why are there so many empty tables?

You often see large areas of empty tables in casinos. This is not because they have too many quotas, but due to a combination of casino actuarial calculations, labor constraints, and pricing strategies:

1. Extreme shortage of "live dealers"
As mentioned earlier, Macau law strictly requires that dealers must be Macau locals. The total labor force in Macau is limited. To maintain 24/7 three shifts, casinos simply cannot recruit (or afford) enough people to open all tables simultaneously. So many tables have quotas but no staff assigned for that shift.

2. Yield management and maintaining prestige
This is the same logic as luxury goods not discounting and airlines preferring empty seats to cheap tickets.

• A casino would rather leave a table with a minimum bet of HKD 3,000 empty than lower it to HKD 300 to attract mass customers.
• Lowering prices would not only degrade the casino's overall positioning but also cause high-value VIP customers to leave due to a noisy environment. Casinos want "high net worth" customer turnover, not "crowds".

3. "Reservoir" and alternating hot/cold periods
Casinos need to reserve capacity for sudden peaks (e.g., sudden arrival of several busloads of tourists or prime time on weekend nights). During normal hours, they deliberately concentrate operations in certain areas to create a "bustling, lucky" atmosphere (which psychologically stimulates players to bet), while closing tables on the periphery.

Therefore, empty tables are not a waste; they are either constrained by the inability to pay dealers or serve as a "price barrier" for casinos to screen customers.