BY TIM JOHNSON
KNIGHT RIDDER NEWSPAPERS
February 24, 2006
MACAO -- Once a backwater for hard-core gamblers, the former Portuguese colony of Macao is rising fast as Asia's entertainment and casino capital.
Some now call Macao the Las Vegas of the East, and Macao's gaming revenues are on par with those of the Vegas Strip.
But Macao is growing even faster than Las Vegas. It's on the threshold of a gaming boom, with more than a dozen casinos and resorts on the drawing boards or under construction, the result of a 2001 decision to open its doors to foreign casino operators. Two years later, Chinese authorities agreed to let visitors cross the border more freely.
Macao's first U.S.-operated casino, the Sands Macao, opened in 2004. This autumn, a second U.S. casino and 600-room hotel, Wynn Resorts Macao, will debut. The $1-billion MGM Grand Macao will follow in 2007. The American operators are bringing panache and entertainment, and they hope to turn Macao into a hot convention destination.
Macao drew 18.7 million tourists last year, more than Germany, and plans to lure 35 million a year by the end of the decade, about what Las Vegas gets now.
"It is on the cusp of getting launched," said David Green, director of gaming practice in Macao for the accounting and consulting giant PriceWaterhouseCoopers.
Macao, a port established 450 years ago by Portuguese traders and Catholic missionaries, has long been overshadowed by Hong Kong, the former British colony that's an hour-long ferry ride to the east. Producing little revenue of its own, tiny Macao legalized gambling in 1847.
Decline in crime
In the decade before Portugal handed Macao back to China in 1999, the enclave was plagued by casino-linked gangs avenging debts with killings.
Macao's monopoly-controlled casinos were havens for VIPs in smoke-filled rooms. Most customers came from Hong Kong. A few trickled in from China.
A series of factors after Macao's handover to China led to the boom. The liberalization of the casino sector coincided with a crippling SARS epidemic in southern China in 2003. To help Hong Kong's suffering economy, mainland authorities relaxed travel restrictions to Hong Kong and Macao. Chinese began to flood across the border. Casinos are illegal on the mainland, yet China's 1.3 billion citizens itch to get rich quickly and travel outside traditional borders.
"The mass market has really exploded here. More and more people in their mid-20s and mid-30s are coming in ... even for the day," said Kareem Jalal, editor of Inside Asian Gaming, a new Macao-based magazine. "There's a lot of untapped wealth."
Sleaze and crime ebbed. Macao beefed up its police force to 7,000 officers in a territory with only 482,000 residents.
Preparation for expansion
Tiny Macao comprises two islands and a peninsula -- less than 11 square miles. Its leaders have prepared for the boom by reclaiming the shallow sea between the islands of Coloane and Taipa to create new land, the Cotai Strip, which soon will emulate the one in Las Vegas.
The sprawling 3,000-room Venetian Macao resort and convention center will open next year, anchoring a promenade of resorts and casinos.
"The target is that once all of Cotai is built in about 10 years' time, there will be 60,000 more hotel rooms," said Buddy Lam, a Sands Macao spokesman.
There are 11,042 rooms now, a sign that Macao is outpacing Las Vegas, the fastest-growing U.S. city in the past quarter century.
More Chinese than ever can travel to Macao freely. Under a system begun in 2003, some 190 million Chinese from 38 major cities can come at a moment's notice.
Adding to the optimism: Plans are moving ahead for a 17.5-mile bridge between Hong Kong and Macao by 2010, ending reliance on ferries. The opening of Hong Kong Disneyland last fall is adding to the region's momentum.
Cultural ties
As arrivals soar, Macao casinos can keep minimum bets high -- about $40 -- far higher than in Las Vegas. Much of Macao's casino revenue, though, is gathered in VIP rooms where minimum bets are $2,600.
Some of the bettors look like Chinese farmers, wearing cloth-soled shoes and rustic clothing. Yet they plunk down big money.
A gambling table in a Macao casino generates $17,808 in revenue per day vs. $2,524 for a similar table in Las Vegas, according to the report "Macao Mania," issued last year by the investment bank CLSA. It said the average Macao visitor spends $322, $40 more than the average visitor to Las Vegas.
Whether Macao can move smoothly from a gambling destination for high rollers to a mass-market holiday site remains unclear. Nearly 60% of Macao's visitors are from the mainland, and some observers say cultural affinities among ethnic Chinese offer guarantees.
"People feel at home here. They are Chinese. They can speak Chinese and eat Chinese food," said Harald Bruning, the director of the English-language Macao Post.
Concerns loom
But there are obstacles. Political upheaval or a health epidemic in China could disrupt arrivals, experts said, and a crackdown on corruption also could hurt.
And Singapore, which last year ended a ban on casinos, may crimp Macao's growth.
U.S. casino operators also are limited by an inability to tap into high-stakes gamblers from the mainland who bet on credit.
Currently, 70% of Macao's gaming revenues come from VIP rooms at traditional casinos that let mainland industrialists and entrepreneurs bet on credit. Hong Kong-run casinos allegedly use enforcers and other means to collect bad debts.
U.S.-operated casinos have no legal mechanism to collect bad debts in China and no way to check credit.
The biggest gamble, though, may be whether mainland visitors to Macao are ready to take in Vegas-style shows, stay in convention hotels and shop in high-end stores.
"If you look at Macao, you'd say that no one has ever put to the test the appetite for the Chinese for anything other than gambling," said Green of PriceWaterhouseCoopers.
KNIGHT RIDDER NEWSPAPERS
February 24, 2006
MACAO -- Once a backwater for hard-core gamblers, the former Portuguese colony of Macao is rising fast as Asia's entertainment and casino capital.
Some now call Macao the Las Vegas of the East, and Macao's gaming revenues are on par with those of the Vegas Strip.
But Macao is growing even faster than Las Vegas. It's on the threshold of a gaming boom, with more than a dozen casinos and resorts on the drawing boards or under construction, the result of a 2001 decision to open its doors to foreign casino operators. Two years later, Chinese authorities agreed to let visitors cross the border more freely.
Macao's first U.S.-operated casino, the Sands Macao, opened in 2004. This autumn, a second U.S. casino and 600-room hotel, Wynn Resorts Macao, will debut. The $1-billion MGM Grand Macao will follow in 2007. The American operators are bringing panache and entertainment, and they hope to turn Macao into a hot convention destination.
Macao drew 18.7 million tourists last year, more than Germany, and plans to lure 35 million a year by the end of the decade, about what Las Vegas gets now.
"It is on the cusp of getting launched," said David Green, director of gaming practice in Macao for the accounting and consulting giant PriceWaterhouseCoopers.
Macao, a port established 450 years ago by Portuguese traders and Catholic missionaries, has long been overshadowed by Hong Kong, the former British colony that's an hour-long ferry ride to the east. Producing little revenue of its own, tiny Macao legalized gambling in 1847.
Decline in crime
In the decade before Portugal handed Macao back to China in 1999, the enclave was plagued by casino-linked gangs avenging debts with killings.
Macao's monopoly-controlled casinos were havens for VIPs in smoke-filled rooms. Most customers came from Hong Kong. A few trickled in from China.
A series of factors after Macao's handover to China led to the boom. The liberalization of the casino sector coincided with a crippling SARS epidemic in southern China in 2003. To help Hong Kong's suffering economy, mainland authorities relaxed travel restrictions to Hong Kong and Macao. Chinese began to flood across the border. Casinos are illegal on the mainland, yet China's 1.3 billion citizens itch to get rich quickly and travel outside traditional borders.
"The mass market has really exploded here. More and more people in their mid-20s and mid-30s are coming in ... even for the day," said Kareem Jalal, editor of Inside Asian Gaming, a new Macao-based magazine. "There's a lot of untapped wealth."
Sleaze and crime ebbed. Macao beefed up its police force to 7,000 officers in a territory with only 482,000 residents.
Preparation for expansion
Tiny Macao comprises two islands and a peninsula -- less than 11 square miles. Its leaders have prepared for the boom by reclaiming the shallow sea between the islands of Coloane and Taipa to create new land, the Cotai Strip, which soon will emulate the one in Las Vegas.
The sprawling 3,000-room Venetian Macao resort and convention center will open next year, anchoring a promenade of resorts and casinos.
"The target is that once all of Cotai is built in about 10 years' time, there will be 60,000 more hotel rooms," said Buddy Lam, a Sands Macao spokesman.
There are 11,042 rooms now, a sign that Macao is outpacing Las Vegas, the fastest-growing U.S. city in the past quarter century.
More Chinese than ever can travel to Macao freely. Under a system begun in 2003, some 190 million Chinese from 38 major cities can come at a moment's notice.
Adding to the optimism: Plans are moving ahead for a 17.5-mile bridge between Hong Kong and Macao by 2010, ending reliance on ferries. The opening of Hong Kong Disneyland last fall is adding to the region's momentum.
Cultural ties
As arrivals soar, Macao casinos can keep minimum bets high -- about $40 -- far higher than in Las Vegas. Much of Macao's casino revenue, though, is gathered in VIP rooms where minimum bets are $2,600.
Some of the bettors look like Chinese farmers, wearing cloth-soled shoes and rustic clothing. Yet they plunk down big money.
A gambling table in a Macao casino generates $17,808 in revenue per day vs. $2,524 for a similar table in Las Vegas, according to the report "Macao Mania," issued last year by the investment bank CLSA. It said the average Macao visitor spends $322, $40 more than the average visitor to Las Vegas.
Whether Macao can move smoothly from a gambling destination for high rollers to a mass-market holiday site remains unclear. Nearly 60% of Macao's visitors are from the mainland, and some observers say cultural affinities among ethnic Chinese offer guarantees.
"People feel at home here. They are Chinese. They can speak Chinese and eat Chinese food," said Harald Bruning, the director of the English-language Macao Post.
Concerns loom
But there are obstacles. Political upheaval or a health epidemic in China could disrupt arrivals, experts said, and a crackdown on corruption also could hurt.
And Singapore, which last year ended a ban on casinos, may crimp Macao's growth.
U.S. casino operators also are limited by an inability to tap into high-stakes gamblers from the mainland who bet on credit.
Currently, 70% of Macao's gaming revenues come from VIP rooms at traditional casinos that let mainland industrialists and entrepreneurs bet on credit. Hong Kong-run casinos allegedly use enforcers and other means to collect bad debts.
U.S.-operated casinos have no legal mechanism to collect bad debts in China and no way to check credit.
The biggest gamble, though, may be whether mainland visitors to Macao are ready to take in Vegas-style shows, stay in convention hotels and shop in high-end stores.
"If you look at Macao, you'd say that no one has ever put to the test the appetite for the Chinese for anything other than gambling," said Green of PriceWaterhouseCoopers.
