Macau surpassed the Las Vegas Strip to become the world’s biggest gambling center in 2006, measured by total gambling revenue, according to industry analysts and government figures released this week.
In the eight years since Macau, a former Portuguese colony on the coast near Hong Kong, was returned to Chinese control in 1999, it has experienced a huge boom in casino investment, and millions of mainland Chinese have been flooding into the tiny island territory to gamble. As a result, gambling revenue soared by 22 percent in 2006, reaching USD 6.95 billion, according to figures released by the local administration yesterday.
Las Vegas has not yet released its own full-year revenue statistics. But its cumulative figures were trailing those of Macau in the final months of last year, and analysts estimate that the 2006 total will come in around USD 6.5 billion. Where Macau was once derided for its seedy gambling dens and endemic organized crime, it is now being referred to as Asia’s Las Vegas, and not just by the locals.
Hoping to ride the gold rush, some of the world’s biggest casino operators, including Las Vegas tycoons like Sheldon Adelson, Steve Wynn and Kirk Kerkorian, have agreed to invest more than us$ 20 billion to outfit Macau with new luxury hotels, giant casinos and V.I.P. suites to cater to the apparently enormous gambling appetite of the mainland Chinese.
Macau is the only place in China where gambling is legal, and it is only in recent years that many ordinary Chinese people have been able to get permission to visit the city. Last year, some 22 million visitors poured in, most of them from China.
For investors, one of the big lures is that, on average, the city’s gambling tables pull in about seven times more money than tables in Las Vegas. The winnings are a testament to how serious the gamblers are in this part of the world, despite the fact that income per person in Chinese averages just USD 1,700 a year.
Other cities in the region are eyeing Macau’s success and rethinking their tourism strategies. For instance, Singapore is now planning to build its own casino resort, and Hong Kong officials have talked about allowing casino gambling. But few rivals will be able to try to match Macau, which already has 24 casinos and over 2,700 tables in operation. To accommodate even more visitors, the 25,899 sqm city of 470,000 residents is expanding its airport and reclaiming broad tracts of land from the sea.
The city’s transformation began in 2002, with the expiration of the Macau billionaire Stanley Ho’s colonial-era 40-year monopoly on gambling in the territory. New licenses were issued to a handful of competing operators as well as Ho, and a construction boom began. The city now has two giant Las Vegas style casino-hotels, the Sands Macau and the USD 1.2 billion Wynn Macau, which opened late last year with 600 guest rooms and about 200 gambling tables.
Ho’s family of casinos and entertainment palaces are also expanding, betting that the casino and entertainment pie will keep his profits growing rapidly enough to further enrich his empire even though it is now shared it with competitors.
Adelson, who operates Las Vegas Sands Corporation, says he plans to spend USD 4 billion to build whole Vegas-style strip, including a hotel, casino, shopping mall and entertainment complex that would include the world’s largest casino. Part of the plan among investors is to transform Macau into more of a destination for conventions, entertainment and leisure.
Some analysts say Macau, ruled by Portugal for 450 years, is an ideal spot for such a destination because about 2.2 billion people live within five hours’ flying time of the city. Its growth since 2000 has been spectacular, largely because China has liberalized its travel policies and allowed more of its citizens to visit Macau and other parts of the world.
Though Macau appears to have overtaken the Las Vegas Strip in 2006, it still lags far behind the state of Nevada as a whole, which reported close to USD 12 billion in gambling revenue in 2005. Still, the Chinese government is not wholeheartedly supportive of the Macau gambling boom, because the city seems to attract the corrupt as well as the merely sporting.
Some analysts have also warned about over investment and about overly rosy forecasts of gambling revenue growth. But most analysts and investors have dismissed such talk and instead have watched the flood of gamblers into Macau.