A Gambling Mecca Flourishes on China's Edge

MACAO — At 11 in the morning, six Asian men sit hunched over baccarat tables in a room with hardwood floors, plush carpets and paintings of European landscapes.

Amid clouds of smoke they place bets that start at $1,300 per hand and can rise to more than $250,000.

CRAIG SIMONS/Cox Newspapers (enlarge photo) Players gamble at the Venetian casino in Macao, a former Portuguese colony that surpassed Las Vegas in gaming revenues last year and is expected to surpass all of Nevada this year. CRAIG SIMONS/Cox Newspapers (enlarge photo) Cranes tower over hotels being built on the Cotai Strip, a $12 billion Las Vegas-style development in Macao, a former Portuguese colony on China's southern border. Macao generated more gambling revenues than Las Vegas last year and is expected to surpass all of Nevada this year.

Such high-stakes wagers and the modest bets of millions of Chinese tourists are making Macao, a once-sleepy Portuguese colony on China's southern edge, into the world's most profitable gambling center.

Last year, the city's 27 casinos generated more revenues than Las Vegas. Analysts predict that an influx of visitors could push Macao's gaming revenues past the entire state of Nevada this year — a trend that could cut into profits at American gaming resorts.

"Macao already is sucking away a bit of the operating capital from the big casinos in America," said David Green, a casino expert for accounting firm PricewaterhouseCoopers in Macao. "The key difference with Las Vegas is that Macao is still very much a growth market."

Macao's success has largely been an offshoot of China's economic rise.

Before 2002, the city — which covers a peninsula and two islands — had only 11 casinos, most of them "just VIP rooms in hotels," said Davis Fong, director of the Institute for the Study of Commercial Gaming at the University of Macao.

But after Macao returned to Chinese control in 1999 as a semiautonomous region similar to Hong Kong, Beijing opened the gaming industry to competition and relaxed laws prohibiting individual Chinese tourists.

With gambling banned in mainland China, Macao has become a prime tourism destination.

In 2007, Macao had 27 million visitors, almost four times more than a decade ago. Almost 15 million of those tourists came from mainland China, a number that grew 24 percent last year, according to official data.

Residents of nearby Asian nations and the United States increasingly are traveling to Macao to gamble.

Since 2003, the number of tourists from Southeast Asia has increased by an average 70 percent each year while 202,000 Americans visited last year, a 38 percent increase over 2006.

American companies — including the Las Vegas Sands Corp., Wynn Resorts and MGM Mirage, the owner of 19 casinos in the United States — have invested in Macao to tap the growing demand. Wynn Resorts, run by American gambling mogul Steve Wynn, opened a $1.2 billion casino and resort in 2006 while MGM Mirage opened a $1.25 billion joint-venture casino last December.

Last August, the Sands Corp. inaugurated the costliest venture to date, a $2.4 billion Venetian resort and hotel with 3,000 guest rooms and more than 800 gaming tables. By 2011, the Venetian will be the largest casino in a $12 billion Las Vegas-style development of casinos, hotels and entertainment venues the company has dubbed the "Cotai Strip."

So far, the high-stakes gamble on China's gaming industry have paid off. Casino revenue in Macao increased to $10.4 billion last year, a 46 percent increase since 2006.

With gambling revenues expected to grow at more than 20 percent this year, the city is set to surpass Nevada, which earned $12.8 billion in gaming revenues last year, Green said.

Besides its prime location near China's booming economy and 1.3 billion people, Macao's casinos have benefited from a willingness among Chinese gamblers to wage higher stakes than Americans, experts said.

"It's more all or nothing with Chinese gamblers," Green said. "They generally have a pretty determined view that they can beat the house."

That attitude was evident in the Venetian's enormous gaming room. Thousands of Chinese crowded around baccarat, roulette and dice tables.

Many players wore clothing containing red — a color traditionally considered lucky — and flocked around winning players in hopes that they might absorb some of their luck.

"Our traditional beliefs are still very strong," said Zhang Airong, a 35-year-old businessman visiting from China's southern Guangdong province who had visited Macao "maybe 10 times" and didn't mind losing $3,000, a typical month's salary for him.

"If I lose, I can win it back next time," he said.

For the casinos, however, the biggest customers are high-rollers. According to Macao University professor Fong, 67 percent of Macao's gambling revenues come from VIP rooms with minimum bets of at least $1,300. Macao's casinos try to entice wealthy gamblers with high-end decor and perks including free rooms, lavish meals and first-class flights.

The Venetian entices top players with complementary hotel rooms including two 7,770-square-foot presidential suites complete with grand pianos, fully stocked marble bars, karaoke parlors and private hair salons.

In one of four Palazzo suites offered to VIP customers, butlers point out details including a sensor-enhanced-toilet that opens and closes its own lid and a shower big enough to fit a large family.

The Grand Lisboa, a casino opened last year by Hong Kong billionaire Stanley Ho, displays a $9 million sculpture in its lobby and is decorated with giant crystal chandeliers.

"Everybody is trying to be the V-V-VIP club," said Buddy Lam, a spokesman for the Venetian. "We're trying to build our brand."