'Casino' capers

Well, almost. Gupta was sitting on a computer terminal with the world under his feet and his head on cloud nine. Actually, he had purchased 5,000 shares of a textiles company""with Kolkata connections""at Rs 88 per share. Immediately after he took position on the counter, the stock went down to Rs 86 driving him out of the market. And almost mad.

A profit of only Rs 2 per share would have made him Rs 10,000 richer but a stop-loss trigger on the lower side had knocked off Rs 10,000 from his net worth. An irate Gupta returned to the terminal in the evening to check out where the stock had closed for the day.

And, it was then he got even more mad, almost hysterical with rage. The stock had closed a 52-week high of Rs 95 in the club's quotations! People have been driven to drink and even suicide on lesser provocation.

Gupta is but one of a couple of thousand investors engaged in betting on stocks at nearly 20 "casino" counters bang behind Writers' Building - the seat of the state's communist government and barely 150 meters from the city police headquarters at Lal Bazaar.

Here is a sleek outline of the modus operandi of the casinos. Every club has an entry fee, ranging between Rs 5,000 to Rs 10,000. An investor is allowed to bet on stocks moving upwards and once he loses the amount deposited as entry fee, he is out of the club unless he coughs up additional deposits.

An investor's speculative losses are the casino owners' gains. A casino owner does not key in full buy order into the regular bourses' electronic trading system. He has his own closed-group racket where the owner takes 99 per cent of the counter party risk upon himself, while entering only one per cent of the order into the system to obtain a strike price for calculations. All transactions are settled in cash at the end of the day.

But to some extent, it is a fair system. An investor's loss is limited to the amount deposited but if the investor is in-the money (making notional profits), he gets all the profits at the end of the day.

In this specific illustration, when Gupta bought 5,000 shares of the textiles company, the casino owner keyed in a buy order for 50 shares on the NSE trading platform through the leased line he has taken from a bona fide NSE member. Since Gupta had deposited Rs 10,000, he was thrown out of the system when the price went Rs 2 lower.

While the casino owner loses Rs 100 (50 x Rs 2) to the NSE system, Gupta lost Rs 10,000. Thus, the casino owner's makes a net profit of Rs 9,900 (Rs 10,000 - Rs 100).

The casinos offer some incentives though. These include an on-the-house lunch and sometimes return taxi fare if an investor's purse is fully busted. There are young lady operators to key in the client's purchase order.

Almost all the casino owners smilingly watch the clients bleed themselves to death from across a glass panel! Now, here is how the system is abused. The casino owners use NSE terminals which are in turn borrowed from some one else.

The NSE member who extends terminal feigns ignorance if anything is traced to his memebrship account. The Calcutta Stock Exchange (CSE) says it has no locus standi in the matter as the business is generated through NSE terminals.

A section of Lyons Range brokers said only the police could crack down on the casinos which has taken the outlines of betting on cricket.