Macao
Macao: behind the scenes in a gaming paradise
For some people Macao is merely the name of a country which (for those who know) was restored to China by the Portuguese in 1999. For others, Macao and its thousands of slot machines and casino games is synonymous with gaming addiction. Within the space of a few years Macao has dethroned Las Vegas to become the global centre for gaming. However, behind the name of Macao are billions of dollars in foreign investment and an economy based entirely on casino games, Mafioso practices and money laundering, and the position of China, which exercises strict control over this tiny country.
In this special report we will try to understand how Macao became an international gaming capital, who the investors are, the profile of the players who come to this gaming Mecca, and the impact of the Mafia prowling on the outskirts.
Macao was returned to China by Portugal in 1999, and within a few years it had built a veritable gaming empire. In so doing, Macao trumped Las Vegas, which for decades had enjoyed the reputation of world gaming capital. No town in the world overshadowed Las Vegas, which certainly underestimated the scale of Macao. The American casino owners saw Macao as the "Asian Las Vegas". They were right. Macao has indeed become the international gaming capital, ahead of Las Vegas and a long way in front of Atlantic City. Casino operators reign over this small patch of territory under a Chinese administration that permits gaming. Just imagine that the population of a territory of almost 9.6 million square kilometres is limited to playing in an area of 28 square kilometres. This is the situation in China, which has legalised gaming only in Macao. Nearly 1.5 billion Chinese can only play in Macao, which gives an idea of the potential of the physical casinos situated in this tiny territory, some of which have been built over the sea.
It is important to understand that the great American magnates quickly became interested in Macao to attract players from the Far East. Macao is ideally situated geographically for the new millionaires from Russia (following the fall of the USSR, where the oligarchs made their fortunes in record time) and China, whose flourishing economy has a two-digit growth rate.
In 2007 the receipts of the Macao casinos reached almost $10 billion, an increase of 45% in a single year. Las Vegas was overtaken for the second year in succession, and found the pill difficult to swallow, confronted with such a major competitor. The billions of dollars invested in Macao come from American and Australian investors and Hong Kong businessmen.
Macao bears no resemblance to the Macao of a few years ago. Casinos have sprouted like mushrooms and totally changed the Macao scene. This country, whose population is half a million, is visited every year by millions of tourists who come to play in casinos. The majority of tourists are Chinese, and 27 million Chinese come to discover their new province.
There is a total of 29 physical casinos in Macao, the latest of which was inaugurated recently: the Ponte 16 in the heart of old Macao. This is the only casino in this area of Macao, which is a UNESCO World Heritage Site. The Ponte 16 covers 270,000 square metres and has 320 slot machines and 150 gaming tables. With 5 VIP halls, the Ponte 16 provides its clients with a luxury 389-room 5 star hotel and a spa, restaurants and work-out rooms.
However this casino is a midget compared with giants like the MGM Grand Macao, which was inaugurated on 18th December 2007. Its two 10 metre high golden lions watch over the casino, whose statistics are dizzying: no less than 600 bedrooms, 385 gaming tables and nearly 1000 slot machines. The gaming room covers 20,000 square metres and the investment cost the trifling sum of $1.25 billion.
And yet if that impresses you there is another even larger casino, which gives an idea of the excess of Macao: the Macao Venetian. This casino is the largest building in the world after the Boeing factory. The millionaire Sheldon Adelson's Las Vegas Sands Group built a copy of the Las Vegas Venetian in Macao. This colossal project cost more than $1.75 billion and according to the experts it will be paid for in ten years. This casino is a complete town in itself: an area of 100,000 square metres devoted to 350 shops and nearly 3,500 slot machines without counting the 840 gaming tables. The Macao Venetian is in the Cotai quarter, famous for having been built on land reclaimed from the sea. These luxury casinos have other giant competitors such as the Grand Lisboa, which is owned by the millionaire Stanley Ho, who had the gaming monopoly until 2002. This native of Macao built an empire of exceptional casinos before the market was opened to foreign investors, and particularly the Americans. But the Grand Lisboa is nothing like the Venetian, where 500 metre-long canals invite tourists to take trips on gondolas. In fact the Macao Venetian is a life-size copy of Italy. There is no longer any need to cross the world to discover pizzas, Venetian coffee or hear gondoliers singing O Sole Mio - all visitors have to do is go to Adelson's luxurious casino. Nearly 10 million tourists, mostly Chinese, visited this magic casino in 6 months.
The typical tourist is not a great player but a tourist, often Chinese, who wishes to see for himself this part of China he has heard so much about, where access to casino games is legalised. Recreation is the leitmotiv of these players, who go to Macao to enjoy themselves and perhaps win at their chosen game. Moreover the operators aim to make gaming as "normal" an activity as going to the cinema or a concert, or shopping. The Las Vegas casino complexes are not only made up of casinos but also include shops, attractions, and cinemas etc., and represent 50% of the revenues of the American groups. France is now attempting to ensure that casinos are not limited to games but also offer other activities. Although French casinos are beginning to diversify their activities, they are still a long way from the grand American concepts.
For the Chinese, gaming is just as much a vice as drugs and debauchery. Nevertheless gaming has acquired respectability and is seen as recreation. Indeed, Patrick Partouche says much the same thing and considers that his casinos are genuine recreational and leisure centres. Macao wants the image of gaming to be positive, and is trying to change the "gambling joint" image, with its derogatory connotations. No more poker games in ill-lit back rooms. Macao wants to enhance the image of gaming with sumptuous decors accessible to all comers. Regardless of Macao's efforts to change that image, the reality is not roses all the way.
Unlike French casinos, in Macao gaming tables represent 80% of casinos' revenues. In France about 90% of the gross income from games is derived from slot machines. A Chinese player visiting Macao tries his luck at a games table, and he stays no longer than a few hours, or a night if his budget allows. Every type of profile can be found in the Macao casinos, with a mixture of dialects. The diversity of players is reflected in the "VIP Rooms", where clients are selected according to their wealth. Only rich clients can enter these exclusive and often darkened rooms.
VIP rooms, accessible only by wealthy players, represent the bulk of casinos' revenues. These rich players are enticed by middlemen called Junkets. If you look up "Junket" in the dictionary you'll find "expense-paid voyage". So a junket is someone who draws rich players into casinos and receives a commission from casinos. Junkets are the backbone of casinos, which could not survive without them. Officially, junkets are supposed to look after travelling arrangements for the players, but their role is much more important than that. For good reason, these guardians of wealthy clients, paid by commission, are called "chip stackers" in Cantonese.
Junkets play the role of banker to rich clients who play on credit. A player can go to Macao with no money, and the junket will lend him the sum he requires. When he goes home the player settles the account. Big players can be granted special favours, such as schemes which multiply the sum played by 100 or even 1000. For example on some games the player cannot exceed a maximum sum. He can agree with his junket that when he bets 100 on the table, he is really playing 1,000 or even 10,000. Whether he wins or loses the additional bet is settled between the player and the junket without casinos being involved. Or the player can play by phone and the junket bets directly for him. These opaque operations are dubious, and are generally pure money-laundering. Each year the gaming tables in Macao handle between $300 and $400 billion, some of which is far from being spotless.
The mafia is omnipresent in Macao and clients who fail to settle their debts can find themselves in a difficult position, because the local or foreign mafia use strong-arm methods to obtain payment of debts. This can range from a simple beating-up to illegal detention, including "disappearances" or assassination. In the gaming world no abuse of the strict rules of the system is tolerated, and anyone who does not settle his debts puts his life in danger.
In 2004 Macao decided to register junkets and issue them with a licence in order to control them. The biggest are actual companies quoted on the Hong Kong Stock Exchange but, due to a shortage of staff, not all of them are known to the police. The impenetrability of this type of milieu is often extensive. The American casinos have fallen in line with the Macaoan culture and call upon these junkets so that they can take as many millions of dollars as possible from these rich players.
The other blight lies in the corruption which has hit the political class head-on. Ao Man-Long, the former transport minister, in fact received a 27 year prison sentence for embezzling no less than $100 million on public works contracts. In 2007 taxes from gaming were around $3.7 billion, and handling so much money can give wrong ideas to even the most honest of people. It's not easy to resist the temptation to take a few bank notes to supplement one's income.
Indeed China intends to bring the civil servants of this little country to heel. The decision to imprison the former transport minister for so many years will serve as an example to civil servants, who now know what to expect if they are corrupt. Before Macao became Chinese, a Mafia chief had been sentenced to only 14 years in prison despite being behind several assassinations, which proves that under the Chinese regime, sanctions are more severe and Beijing intends to impose the rule of law and combat corruption.
Beijing is not trying to tarnish the image of Macao but to allow Chinese players to be able to dream of winning in one of the 29 casinos. The financial issues are so important for the State treasury that total transparency would be harmful for casinos, which would lose their big players.
Macao has founded its economy on a single business sector: gaming. The problem in this economy comes from the source of funds of some big players who launder their money. Macao, like Las Vegas, is trying to improve its gaming image by turning its casinos into genuine recreational and leisure centres.
Gaming has always been a debatable subject. It will never be known what is hiding behind some casinos, whether their players have blood on their hands or whether they are mafia or drug network bosses. Who gains from this imperviousness? To tell the truth, everybody gains, above all the State of Macao with its billions of yearly tax revenues.
© Casinoweb
For some people Macao is merely the name of a country which (for those who know) was restored to China by the Portuguese in 1999. For others, Macao and its thousands of slot machines and casino games is synonymous with gaming addiction. Within the space of a few years Macao has dethroned Las Vegas to become the global centre for gaming. However, behind the name of Macao are billions of dollars in foreign investment and an economy based entirely on casino games, Mafioso practices and money laundering, and the position of China, which exercises strict control over this tiny country.
In this special report we will try to understand how Macao became an international gaming capital, who the investors are, the profile of the players who come to this gaming Mecca, and the impact of the Mafia prowling on the outskirts.
Macao was returned to China by Portugal in 1999, and within a few years it had built a veritable gaming empire. In so doing, Macao trumped Las Vegas, which for decades had enjoyed the reputation of world gaming capital. No town in the world overshadowed Las Vegas, which certainly underestimated the scale of Macao. The American casino owners saw Macao as the "Asian Las Vegas". They were right. Macao has indeed become the international gaming capital, ahead of Las Vegas and a long way in front of Atlantic City. Casino operators reign over this small patch of territory under a Chinese administration that permits gaming. Just imagine that the population of a territory of almost 9.6 million square kilometres is limited to playing in an area of 28 square kilometres. This is the situation in China, which has legalised gaming only in Macao. Nearly 1.5 billion Chinese can only play in Macao, which gives an idea of the potential of the physical casinos situated in this tiny territory, some of which have been built over the sea.
It is important to understand that the great American magnates quickly became interested in Macao to attract players from the Far East. Macao is ideally situated geographically for the new millionaires from Russia (following the fall of the USSR, where the oligarchs made their fortunes in record time) and China, whose flourishing economy has a two-digit growth rate.
In 2007 the receipts of the Macao casinos reached almost $10 billion, an increase of 45% in a single year. Las Vegas was overtaken for the second year in succession, and found the pill difficult to swallow, confronted with such a major competitor. The billions of dollars invested in Macao come from American and Australian investors and Hong Kong businessmen.
Macao bears no resemblance to the Macao of a few years ago. Casinos have sprouted like mushrooms and totally changed the Macao scene. This country, whose population is half a million, is visited every year by millions of tourists who come to play in casinos. The majority of tourists are Chinese, and 27 million Chinese come to discover their new province.
There is a total of 29 physical casinos in Macao, the latest of which was inaugurated recently: the Ponte 16 in the heart of old Macao. This is the only casino in this area of Macao, which is a UNESCO World Heritage Site. The Ponte 16 covers 270,000 square metres and has 320 slot machines and 150 gaming tables. With 5 VIP halls, the Ponte 16 provides its clients with a luxury 389-room 5 star hotel and a spa, restaurants and work-out rooms.
However this casino is a midget compared with giants like the MGM Grand Macao, which was inaugurated on 18th December 2007. Its two 10 metre high golden lions watch over the casino, whose statistics are dizzying: no less than 600 bedrooms, 385 gaming tables and nearly 1000 slot machines. The gaming room covers 20,000 square metres and the investment cost the trifling sum of $1.25 billion.
And yet if that impresses you there is another even larger casino, which gives an idea of the excess of Macao: the Macao Venetian. This casino is the largest building in the world after the Boeing factory. The millionaire Sheldon Adelson's Las Vegas Sands Group built a copy of the Las Vegas Venetian in Macao. This colossal project cost more than $1.75 billion and according to the experts it will be paid for in ten years. This casino is a complete town in itself: an area of 100,000 square metres devoted to 350 shops and nearly 3,500 slot machines without counting the 840 gaming tables. The Macao Venetian is in the Cotai quarter, famous for having been built on land reclaimed from the sea. These luxury casinos have other giant competitors such as the Grand Lisboa, which is owned by the millionaire Stanley Ho, who had the gaming monopoly until 2002. This native of Macao built an empire of exceptional casinos before the market was opened to foreign investors, and particularly the Americans. But the Grand Lisboa is nothing like the Venetian, where 500 metre-long canals invite tourists to take trips on gondolas. In fact the Macao Venetian is a life-size copy of Italy. There is no longer any need to cross the world to discover pizzas, Venetian coffee or hear gondoliers singing O Sole Mio - all visitors have to do is go to Adelson's luxurious casino. Nearly 10 million tourists, mostly Chinese, visited this magic casino in 6 months.
The typical tourist is not a great player but a tourist, often Chinese, who wishes to see for himself this part of China he has heard so much about, where access to casino games is legalised. Recreation is the leitmotiv of these players, who go to Macao to enjoy themselves and perhaps win at their chosen game. Moreover the operators aim to make gaming as "normal" an activity as going to the cinema or a concert, or shopping. The Las Vegas casino complexes are not only made up of casinos but also include shops, attractions, and cinemas etc., and represent 50% of the revenues of the American groups. France is now attempting to ensure that casinos are not limited to games but also offer other activities. Although French casinos are beginning to diversify their activities, they are still a long way from the grand American concepts.
For the Chinese, gaming is just as much a vice as drugs and debauchery. Nevertheless gaming has acquired respectability and is seen as recreation. Indeed, Patrick Partouche says much the same thing and considers that his casinos are genuine recreational and leisure centres. Macao wants the image of gaming to be positive, and is trying to change the "gambling joint" image, with its derogatory connotations. No more poker games in ill-lit back rooms. Macao wants to enhance the image of gaming with sumptuous decors accessible to all comers. Regardless of Macao's efforts to change that image, the reality is not roses all the way.
Unlike French casinos, in Macao gaming tables represent 80% of casinos' revenues. In France about 90% of the gross income from games is derived from slot machines. A Chinese player visiting Macao tries his luck at a games table, and he stays no longer than a few hours, or a night if his budget allows. Every type of profile can be found in the Macao casinos, with a mixture of dialects. The diversity of players is reflected in the "VIP Rooms", where clients are selected according to their wealth. Only rich clients can enter these exclusive and often darkened rooms.
VIP rooms, accessible only by wealthy players, represent the bulk of casinos' revenues. These rich players are enticed by middlemen called Junkets. If you look up "Junket" in the dictionary you'll find "expense-paid voyage". So a junket is someone who draws rich players into casinos and receives a commission from casinos. Junkets are the backbone of casinos, which could not survive without them. Officially, junkets are supposed to look after travelling arrangements for the players, but their role is much more important than that. For good reason, these guardians of wealthy clients, paid by commission, are called "chip stackers" in Cantonese.
Junkets play the role of banker to rich clients who play on credit. A player can go to Macao with no money, and the junket will lend him the sum he requires. When he goes home the player settles the account. Big players can be granted special favours, such as schemes which multiply the sum played by 100 or even 1000. For example on some games the player cannot exceed a maximum sum. He can agree with his junket that when he bets 100 on the table, he is really playing 1,000 or even 10,000. Whether he wins or loses the additional bet is settled between the player and the junket without casinos being involved. Or the player can play by phone and the junket bets directly for him. These opaque operations are dubious, and are generally pure money-laundering. Each year the gaming tables in Macao handle between $300 and $400 billion, some of which is far from being spotless.
The mafia is omnipresent in Macao and clients who fail to settle their debts can find themselves in a difficult position, because the local or foreign mafia use strong-arm methods to obtain payment of debts. This can range from a simple beating-up to illegal detention, including "disappearances" or assassination. In the gaming world no abuse of the strict rules of the system is tolerated, and anyone who does not settle his debts puts his life in danger.
In 2004 Macao decided to register junkets and issue them with a licence in order to control them. The biggest are actual companies quoted on the Hong Kong Stock Exchange but, due to a shortage of staff, not all of them are known to the police. The impenetrability of this type of milieu is often extensive. The American casinos have fallen in line with the Macaoan culture and call upon these junkets so that they can take as many millions of dollars as possible from these rich players.
The other blight lies in the corruption which has hit the political class head-on. Ao Man-Long, the former transport minister, in fact received a 27 year prison sentence for embezzling no less than $100 million on public works contracts. In 2007 taxes from gaming were around $3.7 billion, and handling so much money can give wrong ideas to even the most honest of people. It's not easy to resist the temptation to take a few bank notes to supplement one's income.
Indeed China intends to bring the civil servants of this little country to heel. The decision to imprison the former transport minister for so many years will serve as an example to civil servants, who now know what to expect if they are corrupt. Before Macao became Chinese, a Mafia chief had been sentenced to only 14 years in prison despite being behind several assassinations, which proves that under the Chinese regime, sanctions are more severe and Beijing intends to impose the rule of law and combat corruption.
Beijing is not trying to tarnish the image of Macao but to allow Chinese players to be able to dream of winning in one of the 29 casinos. The financial issues are so important for the State treasury that total transparency would be harmful for casinos, which would lose their big players.
Macao has founded its economy on a single business sector: gaming. The problem in this economy comes from the source of funds of some big players who launder their money. Macao, like Las Vegas, is trying to improve its gaming image by turning its casinos into genuine recreational and leisure centres.
Gaming has always been a debatable subject. It will never be known what is hiding behind some casinos, whether their players have blood on their hands or whether they are mafia or drug network bosses. Who gains from this imperviousness? To tell the truth, everybody gains, above all the State of Macao with its billions of yearly tax revenues.
© Casinoweb
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