China’s newest big import: Casinos in Las Vegas style

April 12, 2006

China's newest big import: Casinos in Las Vegas style Peter S. Goodman
Washington Post
Apr. 9, 2006 12:00 AM MACAU, China – In years past, Raymond Wong laid his chips on the worn-out felt of the baccarat tables at the Lisboa casino, a windowless space that epitomized the seedy reputation of this gambling enclave in southern China. Cigarette smoke hovered over throngs jostling for spots at the tables. Prostitutes plied the hallways.

Major transformation

But on a recent evening, Wong instead went to the glass-fronted Sands Macao casino, a landmark property erected by the Las Vegas Sands Corp., best known for its Venetian hotel in Las Vegas. With its seven restaurants, live cabaret acts and private club complete with wine cellar and spa, the $265 million Sands has become an emblem for this Asian gambling haven, which is pursuing an aggressive transformation to capitalize on the growing affluence of China.

"The air is better, and the furnishings are all new," said Wong, 55, who rides the ferry from Hong Kong once or twice a month. "This is something fresh."

Enticed by growing numbers of visitors from China, the world's most populous country, the same companies that built many of Las Vegas' more prominent resort casinos are investing billions of dollars in this former Portuguese colony. They are bidding to turn Macau from a place synonymous with prostitution, money laundering and binge gambling into what some are billing Asia's Las Vegas, a hive of trade shows, restaurants, shopping and entertainment, in which gambling is but one piece of a glitzy resort experience for the masses.

"What we did was simply build the antithesis of what was here," said Frank McFadden, CEO of Venetian Macao Ltd. "It's a proven experience that works, and it's just being put into a pure virgin market."

Gambling revenue soars

Already, though, the market is huge. Macau's gambling revenue nearly tripled to $5.8 billion last year from $2 billion in 2000, according to the government, pulling nearly even with the world's most lucrative gambling center: the Las Vegas Strip, which last year took in $6 billion, according to the Nevada Gaming Control Board.

The gambling boom has enticed Singapore to pursue its own casino plans, with major companies flocking to that island nation as well in pursuit of large-scale projects.

"The proclivity of Asian people to gamble is pretty staggering," said Terry Lanni, chief executive of MGM Mirage, whose $1.1 billion, 600-room MGM Grand Macao is slated to open late in 2007. "People borrow from loan sharks and gamble with it."

In Macau, outside investors are betting they can carve into the empire of Stanley Ho, the 84-year-old magnate who enjoyed a gambling monopoly for four decades, before Macau's government opened the door to foreign companies in 2001. Ho and his family still operate 15 of Macau's 18 casinos.

Across the street from Ho's Lisboa, still the top-grossing property in town, Wynn Resorts, led by Las Vegas icon Steve Wynn, is erecting a $1.2 billion, 600-room hotel and casino slated to open in early September. It will include 200 gambling tables, 340 slot machines, a ballroom seating 700 and 28,000 square feet of retail space.

"There's a huge untapped market," said Grant Bowie, president of Wynn Resorts (Macao) SA. "We've just got to build a destination."

Copy of Las Vegas casino

To the south, on 500 acres of reclaimed land between the islands of Coloane and Taipa, Sands is making the biggest bet of all: a $4.5 billion complex of casino resorts and meeting space known as the Cotai Strip. It is anchored by the 3,000-room, all-suite Macau Venetian Casino Resort, a copy of the Las Vegas property, with faux canals and gondoliers, including a 2,000-seat theater, 850,000 square feet of retail and a 1.4 million-square-foot exhibition center.

The first phase alone will add 12,000 hotel rooms by 2009, more than doubling all of Macau's hotel capacity. About 3,000 workers, 30 cranes and 50-plus dump trucks are building the new Venetian, slated to open the middle of next year. A six-star, 400-room Four Seasons hotel is going up alongside. The Shangri-La chain has pledged to build two hotels on the strip.

Underlying these investments is the rise of the Chinese leisure class. Macau sits on the doorstep of mainland China. Three years ago, as outbreaks of severe acute respiratory syndrome decimated tourism in Hong Kong and Macau, the Chinese government eased travel restrictions, freeing people to visit independently. The number of visitors to Macau rose from 11.9 million in 2003 to 18.7 million last year. About 30,000 people waited in line to visit the Sands on opening day two years ago. During the recent Chinese New Year holiday, roughly 69,000 people passed through the doors.

Where visitors to Las Vegas stay an average of more than three days, most people who come here don't even spend the night, returning to Hong Kong by ferry or by road to the cities of the southern Chinese province of Guangdong. The projects under way are aimed at keeping them here.

Already, though, some are warning that a gold rush mentality is building more resorts than even China can fill.

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