With American moguls pouring in billions, the Chinese are building another Strip on the South China Sea
By Alexandra A. Seno
Newsweek
June 28 issue - A few blocks from Macao's eerily vacant international airport, the wind blows a bamboo basket through wild grass. Meanwhile, on the other side of the world, Las Vegas tycoon Sheldon Adelson sketches his vision for this weedy swath of Macao: a 120-acre, $10 billion "Cotai Strip" of 20 casino-resorts with up to 3,000 rooms each, operated by big chains like Hilton and Marriott. The anchor hotel will be a reproduction of the Venetian, one of Adelson's Vegas casinos, with opera-singing gondoliers plying a man-made canal, stores masquerading as Italian palazzos, a spa, a museum and so on. "Our advertising will say: 'Asian Las Vegas'," says Adelson.
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The famous city of faux cities is now reproducing itself in China. Long a sleepy backwater of seedy casinos, Macao is the new frontier for the Vegas-mogul turf war. Adelson figures he has a two-year lead on his main U.S. rival, Steve Wynn, who just last week announced plans for a $705 million Macao casino. The month before, Adelson drew a throng of 20,000 to the opening of his new $240 million casino, the Sands Macao, ending the 40-year monopoly of Hong Kong billionaire Stanley Ho on gambling in the only Chinese city where casinos are legal. By September, Adelson expects to break ground on the Cotai Strip. The stakes are huge: even Ho's dowdy '70s-era casinos are expected to gross nearly $5 billion this year—almost as much as Vegas.
Could Macao be bigger than Sin City? After the colony of 500,000 returned to Chinese sovereignty in 1999, one of the new government's first moves was to open up the casino industry. In February 2002, it auctioned three new 20-year licenses for casinos to operate alongside Ho's. Two of the three winners were from Vegas: Adelson and Wynn, who won rights to a 15-acre plot next to Ho's landmark Lisboa Hotel. Macao officials expect Wynn's new 600-room hotel to match the lavishness of his Vegas landmarks, the Mirage and the Bellagio. Wynn told NEWSWEEK that Macao is "the most exciting thing I've done. Here I am in my 60s and I am on the edge of China, the most exciting market. My company, Wynn Resorts, will be making most of its money in China."
It pays to move carefully in Macao, a battleground for Chinese triads where loan sharks still stalk the tables. U.S. gambling regulators have publicly warned Wynn and Adelson that allowing organized crime into their Macao casinos could cost them their Nevada licenses. Last year Chinese police had to rescue a Singaporean businessman held hostage by his Macao loan shark for a gambling debt. Wynn says: "Am I concerned about doing business with unsavory people? Yes."
The big question about Vegas's investment in Asia, though, is whether it needs to be so lavish. Alejandro Reyes, a Hong Kong analyst, says the typical Vegas gambler is looking for a good time, but the Macao gambler is "grim, serious," in it for the money, not shows or shopping. Baccarat is the game of choice in Macao, while most Vegas customers just dump coins in the slots. Macao tables earn $22,000 a day, 10 times the Las Vegas average, according to Deutsche Bank. Some analysts believe the Vegas tycoons would be better off opening clean gaming rooms without all the grand gimmicks. One way to navigate the Macao casino culture is with a local guide; in recent months a third Vegas casino group, MGM, has begun serious talks with Stanley Ho's daughter.
Over the long term, the odds favor a Vegas win. China is relaxing travel laws, which will make it easier for mainlanders to visit Macao. Burdett Buckeridge Young, an Australian brokerage, figures Asia's $8 billion gambling market will triple by 2010, in no small part because of Vegas's new role in Macao. On a recent weekday evening, a good crowd filled the glittering new Sands, with smiling waiters dressed in the casino's black-and-gold motif, serving premium Chinese teas. Around the corner at a barge casino owned by Ho, with cigarette burns on the carpets and bored attendants ignoring the handful of patrons, one can almost feel Ho's dominance at Macao's gambling tables waning. Yet even his fortunes continue to rise. Ho remains Macao's premier real estate developer, as well as the operator of Macao's airline and the ferries to Hong Kong and China. If Vegas owns the casinos, Ho may still own Macao.
