CHINA: Macau Bets on Las Vegas Touch

By IPS Correspondents Reprint | | Print |

Antoaneta Bezlova

BEIJING, May 21 2004 (IPS) - Macau is betting on Las Vegas’ glitz and mainland China’s rising wealth in order to transform itself into the Monte Carlo of the Orient.

As a couple of Las Vegas casino bosses put the finishing touches to their Macau business adventures, they foresee a new era for the tiny former Portuguese enclave – which has more visitors and higher revenues than those generated by another U.S. leisure export: China’s first Disneyland in neighbouring Hong Kong.

The first of many U.S. investments opened in Macau on May 18 when Nevada multibillionaire Sheldon Adelson unveiled his new casino, The Sands. “This is the start of a new era in Macau, ” Sheldon told crowds of jumpy gamblers waiting in front of the new building. “The vision starts today.”

Set on the water edge and paired with an auspicious Chinese name that translates into ‘Golden Sands’, the new casino features 319 gaming tables, 510 slot machines, six restaurants, a cavernous theatre and a spa.

Moreover, Sheldon Adelson plans a second project, a complete replica of his celebrated Las Vegas Venetian Hotel Casino where gamblers can take a gondola along a fake Grand Canal on the way to the 2,500 slot machines.

Even before Macau’s legislators have finished scrutinising draft gaming legislation on extending credit and collecting debt, Las Vegas casino moguls are investing more than 12 billion U.S. dollars into a chain of new casinos, hotels and destination resorts that would create more than 10,000 jobs.

“My vision for the future is to transform Macau into Asia’s Las Vegas,” says Adelson. “This is a new beginning not only for Macau but also for the whole Asia-Pacific region.”

China is potentially the world’s greatest untapped gambling market and Macau’s government decision to open the once monopolised gaming industry to competition may turn out to be an inspired measure. Officially, China prohibits any form of gambling other than lotteries. But according to press reports, plenty of illegal soccer betting takes place all over the country around big events like the World Cup or the European championships. Some reckon that China’s underground gambling market is already worth at least 20 billion dollars a year.

As the country enjoys more and longer public holidays, China’s urban rich have been flocking in great numbers to Macau and even to Las Vegas to indulge a national passion for games of chance.

The growing influx of mainland gamblers is already lifting economic growth forecasts for tiny Macau, which is heavily dependent on tourism and its casinos.

Tourism in the first three months of this year was up 25 percent compared with the same period last year. In the first quarter of 2004, some 3.75 million tourists visited the enclave of only 445,000 people.

In 2003, Beijing eased travel rules for mainland tourists to Hong Kong and Macau, allowing people from a dozen Chinese cities to travel individually rather than in organised tour groups. It also doubled the amount of currency mainland tourists are permitted to take with them when travelling abroad.

“The individual travel scheme for mainland tourists has provided a bonanza for Macau’s gaming business,” says Professor Jason Gao, a researcher into Macau’s casino industry at the University of Macau. “This impact is bound to be even greater in the years to come as more and more mainlanders with increasing amount of disposable incomes can freely travel to Macau.”

The new policies are part of a series of measures to help stimulate Hong Kong’s flagging tourism, lift property and share prices and help to boost the popularity of the government of Tung Chee-hwa, the chief executive.

Hong Kong is gambling that its future as a tourist destination would be sealed when the first Disneyland in China opens in 2006.

Macau also decided it needed to rely on U.S. know-how to create the right cultural attractions and double its gambling revenues.

Despite its puritanical opposition to any form of gambling, communist China has been more than lenient towards Macau’s gaming industry after the former Portuguese colony reverted to Chinese rule in 1999.

Article 118 of the Macau Basic Law, the territory’s mini-constitution, implicitly protects the gambling sector by stating that the post-handover government may “define its own policies on the tourism and amusement sector”.

The central government’s enthusiasm for the casino business derives from its potential to finance welfare spending. Macau’s 445,000 citizens benefit from free education, health care and social security – all provided by a gaming industry which supplies 70 percent of government revenues, accounts for a quarter of the Gross Domestic Product (GDP) and employs 5 percent of the territory’s workforce.

The enclave started specialising in casinos in 1872 when the British banned gambling in neighbouring Hong Kong.

To make it easier to collect tax revenues, the industry was consolidated under the control of one man in the 1960s, making Stanley Ho among the richest Chinese in the world, with a net worth estimated at 2.8 billion dollars.

Often referred to as Sun Gor, or Big Brother Sun, he controls Sociedade de Jogos de Macau (SJM), Macau’s casino monopoly company which until this year ran Macau’s all 12 casinos.

SJM’s monopoly ended in 2001 when the new administration of Chief Executive Edmund Ho (the two Hos are not related) decided to award two new gaming licences and open the sector to competition.

Some 21 companies competed for the chance to cash in on mainland China’s passion for gambling and rising numbers of visitors.

The winners included Stanley Ho’s Sociedade de Jogos de Macau, Wynn Resorts from Las Vegas and the Hong Kong-owned Galaxy Resort & Casino. The Las Vegas Sands operates under a subconcession from Galaxy Group’s license.

Twenty new casinos, hotels and resorts are to be built in the city. The Galaxy Casino Group will open its first casino in June, followed by Wynn Resorts later in the year.

Stanley Ho, whose casinos had dominated Macau’s gaming industry for the past four decades, predicted the competition would boost revenues in the end.

“We will learn what they have done better than we do. I have lots of confidence in Macau’s future. The cake is going to be bigger and bigger and we could all have a share,” he told Macau’s media on the day of Sands Casino’s opening.