Macau outstrips The Strip

Since Macau became part of China, gambling in the former Portuguses enclave has taken off in a big way, outdoing even Las Vegas


Tue, Aug 31, 2004 - Page 16

Auge cheer breaks through the cacophony at Sands Macau Casino as the 4 million pataca (US$518,000) blackjack jackpot is won.

Lights flash, music plays and hordes of tourists, mostly from China, gather around to congratulate the beaming winner.

Later, by the huge cocktail bar, two scantily clad Western girls gyrate on podiums to the "muzak" of a house band fronted by two equally skimpily attired female singers.

Overhanging the slot machines and the baccarat, roulette and card tables, a gigantic video screen the size of a tennis court flashes pop videos and ads for other casino attractions, including the upstairs buffet in a restaurant as big as two soccer pitches.

Gambling Macau-style has changed dramatically since Sands, a subsidiary of the Venetian company that owns its namesake hotel-casino complex in Las Vegas, opened in May.

It has brought Vegas pizzazz to the largely autonomous Chinese territory in an industry that had been dominated by dingy, smoke-filled dens since gambling was legalized by the Portuguese colonial government a century ago.

With the emphasis on entertainment above gambling, it is the first in a 25-billion-pataca (US$3 billion) wave of new casino openings that are already revolutionizing an industry which just five years ago had gone into reverse.

At least another 30 similar American-style casino-resorts are planned, which by 2009 are expected to pull in more than US$5 billion annually -- outstripping takings even in Las Vegas.

"The numbers are scary," said economist Albano Martins. "And by all projections, they are just going to get bigger and bigger."

When China resumed control of the territory in December 1999, gaming -- long the pillar of the local economy -- was on the wane as the economic slump in Hong Kong, a 45-minute ferry ride away, deterred its traditional source of punters. That year casinos took only US$1 billion.

Since then the picture has been transformed: according to government figures, gaming receipts had reached US$2.7 billion by June this year, almost equal to the US$3.4 billion taken in all of last year. Martins expects the year-end figure to be US$5.2 billion.

The Macau that political leader Edmund Ho was re-elected to run on Sunday is much changed from the territory he inherited five years ago.

"Another way of looking at it is this: the gaming industry pays 39 percent of takings in tax," Martins says.

"That means that by July, from gaming tax income alone, the government has already paid its budget for 2005."

Driving this sudden boom is a huge surge in Chinese visitors.


Since Beijing last year eased restrictions on travel outside the country, Chinese tourism here has mushroomed: from a trickle in 1999, Chinese arrivals soared to 6 million last year and by June this year had already accounted for 5 million of the city's 7.7 million visitors.

"The mainland is Macau's golden goose," says Sanjay Nadkarni, a researcher at Macau's Institute for Tourism Studies.

Growth is expected to rocket further.

"To fund its expansion plans, the gaming industry has banked on a 50 percent annual growth rate in mainland visitors for the foreseeable future," said Martins.

"The figures so far show they will reach that easily."

But for all its glitz and glamor, Sands is small-fry here: in June, its first full month, it took US$40 million, according to government figures, just under 2 percent of the almost U$S500 million spent by gamblers that month.

Even Galaxy, the Hong Kong-owned company that entered the market at the same time, raked in more, with far fewer tables.

It has led some to doubt the American model in Macau.

"The Chinese operators understand the local market better because they have been here longer," said Martins.

"The Americans say they will bring in the holiday gamblers but the Chinese casinos are making money from VIP tables, which Sands so far doesn't have."

The high rollers of the VIP rooms provided an estimated 80 percent of the US$373 million taken in June by the largest and oldest casino operator: Stanley Ho's SJM.

Ho held the monopoly on gambling here for four decades until this year when the government of Beijing-backed chief executive Edmund Ho (no relation) introduced new legislation allowing foreign competition.

Through his huge conglomerate STDM, Stanley Ho controls much of the economic activity of Macau. Apart from his 12 casinos he owns the ferry company and port, he has a large share in the airport and he controls some of the most prestigious hotels and tourist attractions.

Viewed here as a benevolent uncle, few know why the government decided to break Ho's grip on the city.

"Stanley controls so many rugs he could easily have pulled from under the economy, I think the government wanted to spread the risk," suggests Nadkarni.

Huge Ho

"I think Stanley was seen as too powerful," says local legislator Antonio Ng Kuok Cheong, who opposes the casino expansion plans.

"But I think it also made sense because there was a genuine desire to inject new life into the local market."

Sands Macau is just a taste of things to come. On a 100,000m2 reclamation between two islands called the Cotai strip, it is leading a development that will by 2009 house at least 25 American-style resorts and casinos, including the US$1 billion Venetian Macau.

As well, Ho plans two theme parks and the 40-story Grand Lisboa casino hotel.

Nearby, Galaxy has begun building what will be a 13-story gambling haven; across the road Las Vegas tycoon Steve Wynn will open a 600-room, 200-table complex; and there has even been talk of MGM, which pioneered the family casinos in Vegas, opening a property with Ho's daughter Pansy.

When it is complete by 2009, the Cotai strip will provide some 30,000 hotel rooms -- 4,500 at the Venetian alone -- about 1,000 gaming tables and at least 30,480m2 of convention space.

The strip is expected employ some 150,000 staff.

Many distrust relying on one industry but with no nearby competition and China -- though morally and politically opposed to gambling -- committed to maintaining Macau as the nation's only casino haven, problems, for now, look far away.

"No one can see an end to the gambling jackpot," says Martins.