Macau, says billionaire Steve Wynn, is the safest bet on Earth. It also may be the greatest show, if a recent Saturday evening at Wynn Macau casino is any guide. Thousands of punters, many standing three rows deep, jockey for position to place chips on the sacred green felt. Cheers of joy battle for supremacy against shrieks of dismay from more than 250 gaming tables.
Chain-smoking Chinese men, wearing gaudy polo shirts that would make Tony Soprano blush, lean over baccarat tables, as if praying for a winning hand. Leggy Asian and Russian showgirls gyrate to pulsating music in the distance.
Walk a few minutes down the strip and you can’t miss Stanley Ho’s Grand Lisboa. The casino looks like a giant Faberge egg—that is, if Peter Carl Faberge had hired Liberace to design his masterpieces. While taking in its huge neon facade, perhaps I shouldn’t have been surprised by the two friendly Ukrainian women offering to accompany me back to my hotel for a fee.
Welcome to Macau’s boom. Even by China’s white-hot-growth standards, its gambling-driven prosperity is something to behold. It had 22 million visitors in 2006, a 17% surge from 2005 that propelled the local economy to expand by the same amount. More importantly to the Steve Wynns of the world, Macau has surpassed Las Vegas as the No. 1 gambling hub.
The boom has even impressed Hugh Hefner. In 2009, his Playboy Enterprises Inc. plans to open a 40,000 sq. ft (3,716 sq. m) entertainment complex, including gaming facilities and bunny-suited waitresses. It will be Asia’s first Playboy Club since the last one closed in Manila in 1991.
“I can’t think of a more exciting market to make a bet on than Macau,” Christie Hefner, Playboy chief executive officer and daughter of the company’s founder, said last month.
Now that even Playboy is baring its intentions to take on Macau, it sure makes you wonder about other Asian nations rushing to legalize casinos. Aren’t they too late? Doesn’t Macau’s big head start mean that, well, the fix is already in? So far, Ho, the man who until 2004 held a four-decade monopoly over Macau’s gambling business, has been proven right in his belief that its casinos aren’t a zero-sum game—that the pie would get bigger and bigger. How far that growing pie extends in Asia is another matter. Politicians in Cambodia, Japan, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam either currently allow casinos—or are considering rolling the dice. The hope is to attract more tourists and boost tax revenue.
Macau’s gaming revenue surged to about $7 billion (Rs28,280 crore) in 2006, and analysts such as Rob Hart, a managing director at Morgan Stanley in Hong Kong, expect that figure to reach $10 billion this year. And when even squeaky-clean Singapore is wooing Vegas, you know the taboos associated with gambling are disappearing.
Yet there are risks that Asian governments shouldn’t forget.
One is the losing-your-soul dynamic threatening Macau. This territory of 500,000 people has long been a unique amalgam of East and West with 400-year-old squares, churches and cobble-stone streets from its days as a Portuguese colony—all on China’s doorstep. Now, it’s more like a frontier boomtown. Macau’s Wild-West feel dates back decades, when as a young man, Ho fought off Chinese triad gangsters and pirates to protect his businesses.
Until recently, Macau was known for its seediness—gang wars, brothels and free-wheeling gambling outlets. In 2002, three years after Macau’s return to China, the government decided to open the doors to foreigners, hoping they would clean up the city’s image.
In August, Sheldon Adelson’s Las Vegas Sands Corp. will open the 10.5 million sq. ft Venetian Macao Resort Hotel, complementing his popular Sands Macao. The company is investing an additional $2 billion in hotels and condominiums nearby.
Kirk Kerkorian of MGM Mirage and James Packer, Australia’s richest man, are making big pushes into Macau. Richard Branson’s Virgin Group Ltd also is considering huge bets in this territory measuring just 28 sq km (11 sq. miles).
Macau’s place in history is being lost amid an increasing number of land-reclamation projects and neon monstrosities. This isn’t a puritanical swipe at gambling. It’s just that with millions more people heading this way with a linear focus on gambling—and Macau so keen on accommodating them—how much of the old Macau will survive?
Another question is whether Asian competitors are getting into the game too late. Sure, Singapore seems well placed to tap the wealth of Indians. Perhaps the same will be true of Malaysia and Thailand. By the time many of these casinos are up and running, though, Macau’s reputation as the Vegas of Asia may be tough to beat. Entrepreneurs such as Adelson also are betting big on Macau’s potential as the convention centre of the world’s fastest-growing region. Here, proximity to China’s 1.3 billion people and Hong Kong’s seven million people can’t be ignored. Even after China’s recent move to cut back on the number of travelling visas granted to mainlanders, casino operators seem plenty bullish on demand for their gaming facilities.
There’s an old saying that no one ever made money betting against Hong Kong. With casino magnates and Playboy developing a similar view of its sister city, Macau, the fix may already be in. BLOOMBERG
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