Asia Times 5 Sep 07
The casino that ate Macau
By Kent Ewing
HONG KONG - When the Venetian Macau, the world's largest casino, opened its doors last week, Macau completed its transformation from colonial backwater to the Las Vegas of Asia.
And, going strictly by the numbers, that transformation has been a winning bet. In the space of five years, thanks to its booming gambling industry, Macau has overtaken the Las Vegas Strip as the richest gambling market on the planet.
Consequently, the city's economy is surging, with per capita gross domestic product (GDP). surpassing neighboring Hong Kong's last year.
Despite the slick new casinos and bulging city coffers, however, Macau is in trouble.
The singular focus on turning the city into a gambling capital has skewed the economy, draining the labor pool and undermining other industries.
With the highest-paying jobs now available in casinos, a rising number of youth are dropping out of school to grab them, and there is also growing unrest among locals over the cheap foreign labor that has been imported to support the casino boom.
Moreover, corruption has raised its ugly head. The Venetian colossus has been jokingly called "the casino that ate Macau" by William Weidner, president of Las Vegas Sands Corp, which built the mega-resort.
For critics of Macau's single-minded growth strategy, Weidner's joke stands as a dark metaphor for the decline of other sectors of the economy in favor of gambling and for the social ills that have accompanied that decline.
For the moment, however, those voices are a cry in the wilderness of Macau politics, drowned out by the hype and hoopla surrounding the opening of the Venetian.
After all, it's hard not to be impressed by the sheer scale of the US$2.4 billion gamblers' paradise.
Until the Venetian opened it doors on August 28, the $240 million Sands Macau casino resort, which debuted in 2004, had set the standard for opulence. Ten times the size of the Sands, the 32-story Venetian boasts 850 gaming tables, 4,100 slot machines and 3,000 hotel suites - which in a single day accounted for a 65% increase in five-star hotel rooms on offer in the city. Add to that a 93,000-square- meter shopping plaza for 350 different retailers and a sports stadium that seats 15,000, not to mention 111,000 square meters of convention space.
In an attempt to re-create the charm and elegance of Venice, the resort will employ natty gondoliers to transport guests down canals that course through the largest single building in Asia. Indeed, the only building in the world larger than the Venetian was built to hold airplanes - the Boeing plant in Everett, Washington.
The Venetian will carry a payroll of about 15,000 employees, roughly 5% of the labor force in Macau, a city 60 kilometers southwest of Hong Kong with a population of 526,000 and a total land mass of about 16 square kilometers, 40% of which has been reclaimed from sea.
A sleepy Portuguese colony for 442 years, Macau reverted to Chinese rule in 1999. Macau officials hope the Venetian will not only attract the growing number of high- rollers on the mainland - where the economy continues its nearly 30-year miracle of high growth while gambling remains taboo - but also lead to a more diversified economy, enticing to shoppers and conventioneers.
Ultimately, the city hopes to rival Hong Kong as a convention and entertainment hub.
When the Venetian opened, however, with 3,000 people lined up at its doors in anticipation of the event, the main theme was clear. The opening date - August 28, or 8 /28 - was auspicious, as those are lucky numbers that signify "easy riches" in Chinese. And the casino opened at precisely 7:18pm. That's 19:18 on the 24-hour clock, which adds the number 9, which means "eternal", to all the good luck and riches already promised.
Numerology may have taken center stage, but the resort, which is perched on the reclaimed Cotai Strip, also staged an entertainment extravaganza that featured famous pop singers from Taiwan and Hong Kong as well as the Montreal-based Cirque du Soleil and American pop diva Diana Ross.
By all accounts, the opening was a smashing - and, of course, fulsome - success. That success is just the latest and most lavish addition to Macau's gambling culture since the city liberalized its gaming market in 2002 and invited moguls from Las Vegas, Nevada, to compete with Stanley Ho Hung-sun, the 85-year-old Hong Kong-born billionaire who had monopolized the industry for the previous four decades.
Now Macau's 26 casinos are generating more revenue than the 38 resorts on the Las Vegas Strip. Casino revenue in the second quarter of this year grew 48.9% year on year, to more than $2.4 billion. That came on top of first-quarter growth of 43.5%.
As a result of the gambling boom, huge construction projects have pushed investment up 44.4% in the second quarter. The good times should keep rolling as the $1.1 billion MGM Grand Macau and the $308 million Ponte 16 resort, financed in part by Ho, become part of Macau's gambling landscape this year.
Spurred by gaming revenue, the city's GDP growth for the year will exceed 20%, according to government projections. Macau's tourism industry is growing so fast - 26 million visitors are expected this year, and 30 million in 2008 - that the city's transport network has reached a breaking point.
A new ferry terminal, which will include a heliport, is being built on Taipa Island to ease the strain on two existing terminals, which deal with as many as 300 launchings a day. Macau's woefully inadequate taxi supplies will also need a big boost, and the government has proposed a 20-kilometer light-rail system.
Tellingly, however, the proposal has been pilloried by locals because it calls for the link to serve casinos while bypassing low-income areas.
The conflict over the light-rail proposal points to a larger battle over Macau's lost soul. Now that the city is a gaming mecca, problem gambling among locals is on the rise, as is casino-related corruption in the police force.
Ironically - thanks to taxes on casinos - spending on education is higher than ever, but an increasing number of students are dropping out of school in their late teens to take up casino jobs that pay as much as US$2,200 a month, twice the median income in the city.
And some of the young croupiers who work in one casino apparently gamble their earnings away in others. Highlighting the problem this summer, two young card dealers leaped to their deaths from highrise buildings after suffering big losses at the city's gambling tables.
The police are also not immune to the gambling fever. An immigration police officer turned loan shark has been arrested for financing the gambling habit of at least 15 of his colleagues, and another 24-year veteran of the force, a deputy sergeant, has been charged with embezzling $36,000 to cover his gambling losses.
Charges of corruption have reached the highest levels of government. Former secretary of transport and public works Au Man-long, the man who oversaw much of the casino- construction boom over the past few years, was arrested last December on charges of taking and offering bribes and money-laundering.
And a South China Morning Post investigation revealed last month that Macau's chief executive, Edmund Ho Hau-wah, holds an undisclosed, indirect stake in Stanley Ho's gambling empire.
Government information director Victor Chan Chi-ping issued a statement that the chief executive declared all his assets in accordance with the law when he assumed office in 1999 and that the suspect shares had been transferred to his brother, but that is impossible to verify, as the transfer documents have not been made public. Meanwhile, Hong Kong corporate filings show no record of the transfer.
The chief executive, once the darling of his political masters in Beijing, faces mounting criticism and labor unrest that has culminated in violent street protests.
On May 1, Labor Day in most of the world, 2,400 demonstrators turned out to decry official corruption and rail against illegal immigrants working in Macau's construction industry. One of the demonstrators' favorite chants was: "Edmund Ho step down."
When the protest turned into a riot, police fired warning shots into the air to disperse the crowd. A passing motorcyclist was apparently struck in the neck by one of the bullets. The 50-year-old man survived, but the reputation of Macau's police force - and that of city as a whole - took a big blow.
A similar protest also turned violent on the previous May Day. Clearly, despite the glimmering facade of the Venetian, all is not well in Macau.
Kent Ewing is a teacher and writer at Hong Kong International School. He can be reached at
[email protected].
