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|Macau gaming capital of the world
| Its casino
industry dwarfs Las Vegas, thanks to millions of Chinese gamblers. But will its
Slide open the
drawer beside your hotel bed and, in many cities, you will find a Gideon's
bible. In Macau you discover a small, neat, plastic-wrapped totem of another
faith: a brand new deck of cards. Even when you have closed your curtains to
the blazing neon, the casinos are with you in spirit. Each year, millions of
visitors, rich and poor, make the pilgrimage from Hong Kong and the Chinese
mainland. The wealthy elite are helicoptered in. Factory workers arrive on
cramped coaches. Their temples have names such as the City of Dreams and
Babylon; the congregations are growing.
They used to call it Asia's Monte Carlo, or the
Las Vegas of the East. But this small territory barely known to many in
the west is the new giant of the casino industry. For centuries, Macau
was a Portuguese colony; since 1999 it has belonged to China as a Special
Administrative Region. Thanks to the relative freedoms it enjoys under this
"one country, two systems" formula, it has leapfrogged its rivals, embracing
the glitz and kitsch of gambling; and, above all, the cash.
These days Macau is bigger than Vegas: four times
bigger, to be precise. Last year, gaming revenues from its 33 casinos hit a
record high of £14.7bn. In April they surged to a new monthly record of
£1.56bn well above the entire annual takings for 2001. Accountancy
firm PricewaterhouseCoopers estimates that the yearly take could hit
£27.5bn by 2014.
Yet some of the shine has come off the industry
recently. The government has vowed to rein in casino development; and US and
Hong Kong regulators have launched inquiries into one of the big operators.
Could the sector's long streak of luck be running out at last?
overnight success of Macau's casino industry was more than a century and a half
in the making. In the 1840s, Portuguese administrators searched for new sources
of revenue as foreign merchants and traders decamped to fast-developing Hong
"They effectively took up all the marginal and grotty jobs and
trades," explains historian Jason Wordie: selling indentured labourers to Latin
American mines and plantations; licensing brothels; and regulating gaming
houses. Camilo Pessanha, a Portuguese poet who lived in Macau for many years,
described it as "a material and moral rubbish heap".
But for the
residents of Hong Kong and southern China, the appeal was simple. "It was close
enough to be accessible and far enough away from prying eyes," says
Wordie, whose book Macau: an Exploration is out next year. "It was the same as
today: for people keeping mistresses or gambling."
Gaming tourism got a
kickstart in the 1920s from an energetic new monopoly; and another boost in the
60s, when the government granted the rights to a syndicate dominated by Stanley
Ho. Until March, the 89-year-old "casino king" held around a third of the
industry. Now, after a very public feud that saw him threatening to sue two of
his 17 children (by four wives), he has announced he is handing over most of
his stake to his family. His empire includes perhaps Macau's best-known casino,
the Lisboa, which these days has the seedy air of a down-at-heel Blackpool
nightclub. Its neon displays have a retro feel and saxophone jazz eases from
the speakers. "No singlets, no slippers, no shorts" reads a sign at the
entrance. Inside the ceilings are low, the lighting dingy and the air thick
with stale smoke.
It is dwarfed by its offspring, the Grand Lisboa,
just across the road. Dominating the skyline for miles, the edifice is a
monument to vulgarity and Macau's new prosperity. Though reportedly inspired by
the region's lotus symbol, it resembles nothing so much as an enormous, gilded
onion, with a flashing globe studded with 1.2m LEDs and long glass shoots
ascending into the sky. In the lobby, tourists marvel at the artwork: giant
fantasias of peaks and temples; gold peacocks with spreading enamel tails. On
the gambling floors, rows of Bank Buster and Black Gold Wild slot machines
flash wildly and even the baize looks brighter. The lights in the ladies'
toilets are crystal extravaganzas.
Macau has the Chinese Communist
party to thank for this transformation. The late 90s were a nadir for the
region, with powerful interests jockeying for position as the gambling
concession drew to a close and Portugal prepared to hand the colony to the
mainland. Turf wars spiralled out of control; 1999 saw 42 murders in a
territory with just half a million inhabitants. "There were bombs going off,
assassinations and out-and-out carnage," says Stephen Vickers of International
Risk, formerly a senior Hong Kong police officer who spent years taking on
triads. "Broken Tooth [a triad leader] saw an opportunity to move in and force
his way through. He was ruthless."
Then Beijing took charge, marching
the military into the centre of Macau and warning the gangs that the violence
had to end. Broken Tooth and his lieutenants were jailed for criminal
association, loan-sharking and illegal gambling. More importantly, the handover
unleashed the mainland's pent-up demand for gambling. Its casinos have
flourished not in spite of the communists' longstanding ban on mainland gaming
but because of it.
"Chinese people love gambling, so they love
to come to Macau," said a Fujian entrepreneur, too coy to give his name as he
took a cigarette break by the Wynn casino's Performance Lake. "There's a lot of
'black' [illegal] gambling on the mainland. But it's safer to play here and
people come to have fun. You don't get things like this at home."
fairness, there are not many places in the world to watch water jets spurt and
fireballs erupt in time to a pounding cover of Holding Out For a Hero. Such
spectaculars are testament to the two factors that turbo-charged Macau's
expansion. The first was the decision to liberalise the industry, introducing a
massive influx of foreign capital and Vegas razzmatazz from American gaming
giants Wynn, MGM and Sheldon Adelson's Las Vegas Sands. The second was China's
astounding economic growth, producing a stream of visitors who could never have
afforded the trip before. In 2001 there were just 3m trips to Macau. Last year
there were 25m, mostly from the mainland.
On peak days during the
Chinese new year as many as 120,000 tourists pour through the doors of the
Venetian Macau. Fortunately, it is the world's largest casino, with 550,000
square feet of gaming space. It is the ultimate in ersatz tourism a
replica of a replica with all the gilding and gondolas from Nevada and
twice the space. Tourists pose for photos in "St Mark's Square" and soak up the
Venetian-style entertainment: living sculptures and American gondoliers with
fake Italian names and faker accents.
Despite such exotic features,
Macau's casinos are carefully tailored to the Chinese market. Feng shui
consultants have determined the layout; players snack on congee or dumplings;
the complimentary drink is tea, not beer. There's little poker and less
roulette, but endless baccarat: the game accounted for more than 85% of
revenues in 2008. The biggest difference is the players' demeanour; the
intensity with which they peel cards from the table and throw them back towards
the dealer. The clack of chips and shuffle of decks is punctuated not by
chatter or laughter but by the occasional, angry thump of a table. Gaming is a
This helps to explain the paradox that confounds many
observers: that a culture with one of the highest saving rates in the world is
so drawn to gambling. In part, the habit is self-sustaining. Chinese people
have been gaming for millennia; "You have a general culture where people will
bet on two flies crawling up a wall," says Wordie.
But gaming expert Dr
Wang Xuehong, of Peking University, suggests there is more to it. Everyone
enjoys taking risks "like being married", she explains but
westerners see betting as a leisure activity, while Chinese players regard it
as a financial venture. "They are taking a risk, but it's taking a risk so that
they can make more money." Studies also show that Chinese gamers have a high
illusion of control, believing they can influence the outcome of what are
largely games of chance. "People are superstitious and believe they have good
luck. It's not really an investment but it looks like an investment to
them," she says.
You can watch average-looking customers drop hundreds
of pounds in just a hand or two. But the real action takes place well away from
the casino floors, in the VIP rooms; around three quarters of Macau's gaming
revenues comes from the thousands of high-rollers. Although the casinos offer
perks, from Jacuzzi-furnished suites to flights in private jets, they depend on
junket operators a by-product of Beijing's currency controls to
bring in these wealthy players. Serious gamblers deposit their yuan on the
mainland and the junket firms advance them money in the casinos' VIP rooms
often extending substantial credit.
"My experience is that
western-owned casinos do their best to prevent wholesale bad activity inside
their premises. But junkets are notoriously difficult to control," says
Vickers. "My personal assessment is that many are triad-controlled. It may be
that the registered operators are clean but the hard reality is that
financiers or guarantors behind them primarily have triad backgrounds of some
sort." He suggests the gangs have "gentrified" in the past decade: "On the
surface the street crime has diminished. [But] the pie is much larger
there is money laundering, loan sharking, prostitution and all the other fun
There have been repeated scandals over Chinese officials using
trips to Macau to gamble away embezzled public money or launder bribes, one
reason authorities have mixed feelings about the industry. In 2008 the gambling
trade wobbled when Beijing tightened travel restrictions to the region, hitting
casinos already reeling from the financial crisis. The sector faced another
challenge in March when shares in Sands China, which owns the Venetian and
Sands Macau, fell on its announcement that Hong Kong regulators were
investigating alleged breaches of financial regulations.
parent company Las Vegas Sands said the US Securities and Exchange Commission
and justice department were investigating it in relation to the Foreign Corrupt
Practices Act. Executives have linked those inquiries to the wrongful
termination case brought by the former chief executive Steven Jacobs. The firm,
which is contesting the suit, said it sacked him for exceeding his authority;
Jacobs has alleged he was fired after resisting "outrageous" demands to use
"improper 'leverage'" against Macau officials.
"Neither the SEC nor the
Department of Justice has accused the company of any wrongdoing. The subpoena
is described as a fact-finding inquiry and does not mean the SEC has concluded
anyone has broken the law," says a Sands spokesman. Sheldon Adelson, the tycoon
behind the group, pledged in March: "We're going to be found absolutely clean."
Others have broader concerns about the impact of casinos. It does not
seem hard to avoid the industry; in parts of Macau you could be in a low-key
Hong Kong neighbourhood, or even thanks to its colonial architecture
a Mediterranean fishing village. But critics point to largely unremarked
effects. The Yat On Pathological Gamblers Counselling Centre reports a rise in
problem gaming, in many cases among casino employees. "When society is
promoting gambling as its pillar industry, it must fulfil its social
responsibilities as well," warns director Mee Kam.
undoubtedly increased in Macau almost 15% of the labour force are in
gaming or gaming-related work and per capita GDP soared to £30,500
last year; one of the highest rates in the world. Yet half of workers earned
less than £8,280. Inequality is soaring and while the rich get richer,
rising property and living costs have outstripped the incomes of poorer
Much as Macau officials enjoy the whopping revenues netted
by an effective tax rate of 39%, they say they want to diversify development.
Yet Aaron Fischer, director of consumer and gaming research for the CLSA
brokerage and investment group in Hong Kong, predicts growth of 20 to 30%
annually over the next five years. "The government cannot control revenue
growth: all they can do is control the supply. They do not want the 60% growth
we saw last year; it wants to send the message to Beijing: we will control
growth," he says.
Casino operators say they are embracing
diversification, expanding into exhibitions and conventions and developing
family attractions. The Venetian has hosted Beyoncé concerts and has its
own Cirque du Soleil show. Resorts are crammed with designer boutiques and
retail sales rose four-fold between 2004 and 2010, to £2.25bn.
"Las Vegas was a hardcore gambling city 50 years ago," points out Dr
Desmond Lam of the University of Macau, author of The World of Chinese
Gambling. "It takes a while to change, but things are going in the right
Even so, it would take a lot of sales of Gucci bags and
tickets for Sarah Brightman concerts to even approach the income from gaming
tables. The truth is that Macau like the visitors who stream here
is placing its faith in the casinos, and praying that its luck holds.