THE high-rollers are hidden in the VIP rooms of the world’s largest casino,
which is not in Nevada but perched on the water’s edge of Macao, a tiny
enclave on the south China coast that was ruled by Portugal for 450 years.
Down on the gaming floors thousands of punters throng round the 740 tables,
stand transfixed before rows of slot machines known as “hungry dragons” and
scoff noodles from the restaurants placed within sight of the rolling dice.
Their hunger for risk has converted a moribund colonial inheritance into the
most lucrative gambling territory on Earth.
It is a Thursday morning but the Sands casino is jammed full. The gamblers are
almost all Chinese, although a smattering of Japanese and Korean can be
heard. About half are women.
Most of them are from China’s less well-off classes — and all of them are
helping to make a Las Vegas billionaire, Sheldon Adelson, even richer.
The founders of the People’s Republic, who purged gambling dens from
their socialist state, would see this as the greatest scene of licensed
depravity to afflict China since 1949. It is certainly the greatest bonanza
to strike Macao since 1999, when it was handed back to China.
At that time it was the epitome of crumbling melancholy, its sole industry a
handful of dreary casinos monopolised for four decades by the venerable Hong
Kong tycoon Stanley Ho. Its streets were prey to rival triad gangsters who
killed with abandon, and its few tourist attractions were sadly run down.
The last Portuguese governor and his police chief departed with relief.
Then, with a few bold strokes, the new Macanese authorities — with a
little help from Chinese intelligence officers and the People’s Liberation
Army (PLA) — transformed the place.
When Ho’s monopoly expired, they declined to renew it. Instead, the biggest
names in American gambling were invited to come to Macao and a $20 billion
(£10.2 billion) casino and hotel-building boom began.
The PLA sent in a small but symbolic garrison of 650 crack troops. Unfettered
by the niceties of European governance, Chinese police imprisoned and
executed triad criminals.
According to people close to the government, Chinese intelligence officers
then gave a stern warning to the well-known underworld figures behind four
key triad clans, the 14K, the Wo On Lok, the Wo Shing Yee and the Dai Huen
Chai. “They were told that the violence had to stop,” said one source. “The
Chinese knew they could not wipe out the rackets but they wanted the
killings to end and the headlines to go away.”
The murder rate duly fell. And as a result more executive jets from Las Vegas
began to land at Macao’s new airport, disgorging lawyers, accountants and a
burly new breed of casino manager.
In 2002, the authorities allowed Adelson and his rival Steve Wynn to build a
huge casino each — Wynn’s bears his own name. A third franchise went to
Ho. Now there are six operators, 25 casinos and 1,700 tables, which are
raking in cash at seven times the rate in Las Vegas.
The government collects a cool 40% in tax on the daily take. Macao’s coffers
have swollen and its GDP has doubled. It surpassed Las Vegas in 2006, when
revenues surged by 22% to $6.95 billion. Research by JP Morgan suggests that
it could be twice the size of its American rival by the end of the decade.
The territory’s chief executive, Edmund Ho, scion of a prominent local
business dynasty but not related to Stanley Ho, has moved to secure foreign
investment by enacting legal reforms.
Macao passed laws to establish the rights and duties of casino investors, to
ban money laundering and, crucially, to legalise and regulate credit for
gambling. This last decision undermined a traditional triad racket.
“The legal and regulatory structures of Macao are in a process of adaptation
and evolution,” said Jorge Godinho at the University of Macao. “In gaming,
many improvements were made since 2001, namely the regulation of gaming
promoters and of credit for gaming, but still much more needs to be done.”
Investment is set to surge again. Later this year Adelson is due to open a $10
billion complex, to include the Venetian Macao, a replica of his
faux-Ital-ian resort in Las Vegas.
MGM is going into business with Pansy Ho, daughter of the octogenarian
Stanley, after an awkward hearing with the Nevada Gaming Board. The
Australian businessman James Packer is in a joint venture with Lawrence Ho,
the old man’s son.
Now our very own Sir Richard Branson has joined the business figures vying to
reap the rewards. He is reported to be planning a $3 billion
“family-friendly” resort, which could include yet another casino if he
strikes a deal with one of the six operators.
Viewed from the gaming floor, it looks like a one-way bet. But this is China,
where for thousands of years the concept of constantly changing fortune has
governed political life and generated a fascination with gambling.
The Macao boom is largely due to the relaxation of restrictions on travel to
the enclave by citizens of the People’s Republic. That led to more than 22m
visitors last year,.
The social effects would not please many Communist party leaders and would
easily provide lurid propaganda for factions on the left, who have regained
influence in far-off Beijing. Take, for example, the customer profile at the
new casinos. Inside Stanley Ho’s Lisboa Casino, the faded dowager of the
waterfront, one finds the smoke-stained decor and hardened clientele
familiar from 100 Hong Kong gangster films, a babble of Cantonese chatter
and a general air of sleaze. Not much has changed in years.
But the hordes coming through the doors at the Sands and the Wynn are a
different breed of down-market punter. Interviews with Chinese gamblers,
conducted without permission from the casinos’ PR departments, painted a
picture of desperation and naivete.
“I am a factory manager from Nanchang city, Jiangxi province,” said a man in a
huddle round the baccarat table. “I’m hoping for good fortune.” He said he
had won about $200.
At the Sands, one of the many middle-aged, plainly dressed women on the floor
said: “I have two shops in Hunan province. I came with my female friends
because we had a discount offer.”
She would not reveal how much she had won or lost, but said she would dine on
a snack she had brought in a plastic bag.
A man at the roulette tables with his wife said: “We came from Shenyang,
Liaoning province. It’s very cold up there now and Macao is nice.” He had a
stack of chips worth more than $2,000. Asked what he did for a living, he
replied tersely: “government”.
Several gamblers said they had been brought by organised tours that gave
incentives such as cheap hotel rooms and food. Their conversations often
mentioned family savings or pooled funds from friends or work-mates. Few of
them know that Adelson recouped his $240m investment in the Sands, after
paying taxes, within just one year.
Asked whether he had been offered credit, one weary-look-ing man in his
forties shook his head, laughed and muttered about the “hei she hui” —
Chinese for the “black societies”, or gangsters.
When Branson starts his due diligence on any partners he may have in mind, he
is likely to discover that there are still unconventional business risks in
Chinese casinos.
Police in Macao and the neigh-bouring Chinese city of Zhuhai are still
investigating the double murder last August of Chao Yeuk Hong, a VIP-room
operator at Stanley Ho’s Lisboa casino, and her husband Lam Po Sang.
Chao, whom sources say was known in the business as “Sister Cat”, was found
with her throat cut, lying next to the stabbed body of her spouse on the
Zhuhai golf course.
Chinese paramilitary units later stormed a forest hideaway and arrested a
42-year-old contract killer in connection with the crime. No more details
have been disclosed.
The Chinese media have high-lighted cases of corrupt officials escaping to
Macao with their ill-gotten gains. One renowned case involved the
embezzlement of $50m from the Bank of China to settle gambling debts.
Underworld influence remains strong in three sectors, according to several
expert sources on the Macao gaming industry.
First, the commission-driven organised junkets that bring Chinese gamblers
into the casinos and lure some into borrowing from loan sharks. Since
gambling debts cannot be legally enforced in China, defaulters have been
held hostage, beaten and blackmailed into payment.
Second, the triads may either own or extort from the bars, karaoke spots,
massage parlours and brothels that cluster round the casinos to offer
entertainment to winners and losers alike.
Third — and the murkiest area of all — is the traditional triad
racket of supplying so-called “dead chips” to gamblers in order to lure them
into the VIP rooms, which most of the casinos operate. “Dead chips” cannot
be cashed in but get the gambler into a game with the chance of winning.
Many 1990s murders stemmed from disputes over the business.
True high-rollers are known as “whales” in casino parlance. Macao attracts
serious gamblers from Taiwan, Thailand, Indone-sia, Korea and Japan. They
tend to fly in by helicopter from neigh-bouring Hong Kong, then vanish into
the VIP rooms and adjacent hotel suites. Millions of dollars in credit can
be pledged on a handshake.
The new breed of high-rolling Chinese gamblers, paradoxically, aspire to Las
Vegas. Their wishes are gratified, say sources in Macao, by first-class
travel and accommodation in Vegas hotel rooms where the curtains are drawn,
the lights stay on and everyone remains on China time for the duration of
the gaming, dining on Chinese delicacies served at odd hours of the night
and day in Nevada.
Back in Macao, Wynn and Adelson have succeeded brilliantly in providing a
taste of American glitz for the Chinese masses, obediently lining up to
stream through their doors.
Outside Wynn’s casino, the tour buses drew up one morning recently in front of
its spectacular synchronised fountain, which plays in time with amplified
music, punctuated by bursts of flame from huge gas braziers.
It serenaded the gawping Chinese customers with a booming rendition of the
song immortalised by Monty Python: Always Look on the Bright Side of Life.
They don’t do irony in the casino business.
