March 5, 2007
Is Macau a safe bet?
Associated Press
MACAU - Chinese businessman Cao Yanglin let his lunch of slow-cooked beef rib with truffle puree and lemon cream sauce go cold as he talked about his gambling spree the night before at the baccarat tables in Macau — the world’s new epicenter for gambling.
The Las Vegas Sands casino sits behind the Fishermans Wharf in Macau, in this Feb. 7, 2006 file photo. Macau - the only place in China where casinos are legal - says it's just getting started.
The 58-year-old property developer said he won $3,840 at the Las Vegas-style Wynn Macau casino hotel, where he was enjoying his noon meal. But he said he lost $7,680 at the new Grand Lisboa, shaped like a giant Faberge egg covered in flashing lights.
The sting of losing so much money seemed to have faded for the smiling Cao, who resembled a TV anchorman with a deep voice, square jaw, dyed black hair and a blue blazer. He was busy musing about the amazing ongoing changes in China and how Macau would profit from the increasingly wealthy Chinese who have a reputation for wagering more than Americans.
“My father was a railroad worker who never left the country,” said Cao, from the northern city of Tianjin, near Beijing. “But I’ve been to Macau more than 10 times and I’ve even been to Vegas. They need to have more baccarat tables there.”
It’s gamblers like Cao who helped this tiny city on the southeastern Chinese coast bump off the Las Vegas Strip last year as the world’s gambling center. The city raked in $6.95 billion in gambling revenue, while the Strip made $6.69 billion, regulators in both cities said.
Macau says it’s just getting started. More casinos, malls, convention centers, resorts and thousands of hotel rooms are being built in the city.
Those investing billions could be on the dream team of the global casino industry: MGM Mirage Inc., U.S. tycoon Steve Wynn and Las Vegas Sands Corp. head Sheldon Adelson, ranked No. 3 on Forbes’ list of the richest Americans.
Also involved is James Packer, executive chairman of Australia’s biggest media and gambling company, Publishing & Broadcasting Ltd. And the flamboyant Richard Branson of Britain’s Virgin Group Ltd. has been talking about investing in a casino resort.
The tycoons say Macau is a financial no-brainer. They’re certain that booming China will continue to get richer and millions of new gamblers will flood into the casinos. The moguls also plan to follow the same blueprint that was wildly successful in transforming Las Vegas from a seedy casino town to a global hot spot for dining, shows, conventions and shopping.
“Macau is the safest bet on Earth,” Wynn, who opened his $1.2 billion casino resort here in September, told The Associated Press.
But some analysts are warning there are plenty of risks. China could get hit with political upheaval or an economic meltdown. New gambling resorts in Singapore and other parts of Asia could lure visitors. Or the shoppers, conventioneers and families just might not show up like they did in Las Vegas.
“I think things could get pretty ugly there pretty fast,” said Matt Hoult, a portfolio manager at ABN AMRO Asset Management who is predicting a glut in hotel rooms.
Business models that succeed in one part of the world sometimes flop in another. Wal-Mart retreated from South Korea and Germany. Disney struggled in France and its newest park in Hong Kong has been a disappointment. Will Macau be a boom or a bust?
Macau — a peninsula and two islands — was ruled by Portugal for 442 years before it was returned to China as a semiautonomous territory in 1999, becoming the last European settlement in Asia.
It has one of Asia’s most intriguing and charming blends of East and West. Street signs are in Portuguese and Chinese. The signature snack is the creamy egg tart on puff pastry. There are still plenty of colonial-style mansions, churches and government buildings painted in pastel yellow, pink and peach. The city center, with streets paved with mosaic tiles, is on UNESCO’s World Heritage List.
But Macau’s dreary side is easy to find. The beautiful buildings are far outnumbered by drab concrete apartment blocks that often have rusty anti-theft bars and cages over the windows and balconies.
In the old casino district on the peninsula, the streets are lined with small stores illuminated with headache-inducing bright fluorescent lights. Shop windows are crammed with watches, Zippo-knockoff lighters, gaudy jewelry and Buddhas made of gold. Cashiers stare glumly at customers from elevated booths made of bulletproof glass.
Macau was a darker, more dangerous place in the late 1990s when the Portuguese were preparing to leave. Criminal gangs waged turf wars with frequent drive-by shootings, kidnappings and car bombs.
In a desperate bid to lure back visitors, one security official famously proclaimed there was nothing to fear in Macau because the triad assassins were professional killers who didn’t miss their targets.
The violence mostly ended after 1999 when the Chinese People’s Liberation Army marched into Macau. But the biggest change came a day after the hand-over.
The Chinese government announced it was ending the four-decade monopoly on gambling held by Hong Kong tycoon Stanley Ho. The news created a huge stir in the global gambling world, and more than 20 bidders vied for the three concessions that were offered.
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