Macau or bust! Asia's Las Vegas fights the economic crisis

It was hailed as the Vegas of the East. But the casino operators who piled into the Chinese city may have backed a loser

Lady Luck is casting a jaundiced eye on Macau, Asia's Las Vegas and the world's biggest gambling market. The former Portuguese colony racked up one of the longest runs of good luck of any territory in the world, but the activity around the green baize tables today is a far cry from the heady days of just a year ago when the croupiers in Macau scooped up more money than Las Vegas and Atlantic City put together.

Macau is fighting the same hex as the rest of the world – the economic crisis – but that has combined with restrictions on the number of visas issued to mainland Chinese VIP gamblers, or high-rollers. News that China will not relax travel restrictions to the enclave hit shares in Macau casino operators hard this month, with Galaxy registering its steepest fall in four years in Hong Kong trading, and the SJM group belonging to Macau's father of gambling, Stanley Ho, also suffering losses.

So Macau is having to deal with less money spent on the tables and less cash to spend on a dramatic expansion plan that was supposed to transform the enclave into Asia's biggest tourist destination

Until 1998, Macau was a sleepy Portuguese dependency, but in the past five years the southern Chinese city has been transformed into the gambling destination of choice for China's high-rollers, who along with millions of other mainland tourists helped Macau overtake Las Vegas as a gambling resort, earning £7bn last year from the tables alone.

To say that Macau has totally seized up would be an overstatement though. There are still thousands of gamblers in every casino you visit, from Las Vegas supremo Steve Wynn's downtown pleasure palace to the MGM Grand. On the floor of the casinos in Macau, instead of the cocktail waitresses familiar from Las Vegas, porters wheel carts of free tea and bottled water. The bars are largely filled with Westerners, while the Chinese focus on the matter in hand – gambling. "Gambling is not a leisure activity for a lot of the people who come here. It's like people in Britain having two pints on the way home, it's part of the culture," said one senior casino executive.

However, average casino profits did slump to £650m a month in the last four months of 2008, down 20 per cent from the average monthly take of £811m between January and August. It's at the Venetian Macau, Sheldon Adelson's £1.6bn project, that the slowdown can be seen most keenly. With 3,000 hotel suites, it opened in August 2007 and was supposed to set down a marker for future development, and it has – the casino is breathtaking in its scale, topped off with the Venetian resort complete with purpose-built canals and gondoliers. But late last year, Las Vegas Sands Corp cut 500 casino workers at the Venetian (around 2 per cent of the total workforce); scaled back weekly hours for 1,000 employees and cut back tips. The company also halted construction of five new hotels, huge shopping centres and several new casinos.

Sands Corp is not the only one feeling the pain. Across the enclave as a whole, 10,000 foreign workers and 2,000 workers from Macau have lost their jobs so far.

Ciaran Carruthers, chief operating officer of Star World Hotel and Casino, said: "Our fourth quarter was down on the third quarter by 8 per cent, but we were still up by 31 per cent on the year. It's time to take some of the heat out of the market and to get back to some semblance of normality." Star World is operated by the Hong Kong group, Galaxy Entertainment, controlled by the billionaire Lui Che-woo, which has also mothballed its Cotai Strip development until the global economy turns in its favour.

Along the Cotai Strip, a finger of reclaimed land which merges the Coloane and Cotai islands, building has come to a standstill on major hotel, casino and shopping projects, including international brands like Shangri-La, St Regis and the Sheraton group. Thousands of migrant workers from southern China have been sent back across the border, joining the ranks of unemployed factory workers in the engine of the mainland economy already reeling from crashing exports. The Beijing government is worried that unemployment in industrial zones in Guangdong could lead to social instability on a major scale.

China's Vice-President Xi Jinping visited Macau recently and urged the territory to diversify its economy as a way of dealing with the slowdown.

Fear in Macau is also focused on the other end of the income scale. VIP high-rollers make up 70 per cent of revenues in Macau, and the casinos are redoubling their efforts to attract the mainland gamblers who keep the roulette wheels spinning. This comes as the Chinese government has put restrictions on trips to Macau, limiting mainlanders to one visit every three months in an attempt to keep Chinese domestic consumption high in the face of a slowing economy as well as preventing corrupt officials gambling away the city coffers on a throw of the dice.

A recent investigation found some cadres visiting three times a week to try to sweeten the local government balance sheets. More than 50 government officials from Guangdong are accused of having a flutter with £2m of public money and six have been jailed or fined, including four years for Wu Xingkui, deputy leader of the Communist Party in the town of Yunfu. He had previously headed an anti-gambling taskforce.

Mr Carruthers says that the changed reality will give the territory's gaming business a chance to take stock and perhaps change the focus to mass-market gamblers, the punters who made Las Vegas so strong. He said: "The worst predictions for this year still have Macau having a better year than Las Vegas ever had. If I was a betting man, I'd say Macau is still going to be very strong for 2009."

From Vegas to Macau: The casino operators who went east

Sheldon Adelson Adelson paid $128m in 1989 for the Sands Hotel and Casino in Las Vegas, which he later demolished and in its place built the Venetian at a cost of $1.5bn. He was the US's third richest man, but at the end of last year he topped a different Forbes list: "America's 25 Biggest Billionaire Losers".

Steve Wynn Wynn first visited Las Vegas at 10, and when he took over the Golden Nugget aged 31 he became the US's youngest casino operator, developing the Bellagio and the Mirage. In 2006, Wynn, who suffers from an eye disease, accidentally put his elbow through a Picasso painting that he had agreed to sell for $139m.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Guru Careers: Software Developer

£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

SThree: Trainee Recruitment Consultant / Resourcer

£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

Ashdown Group: UI Developer - (UI, HTML, CSS, JavaScript, AngularJS)

£25000 - £40000 per annum: Ashdown Group: UI Developer - (UI, JavaScript, HTML...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?