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New Frontiers: Raising the Stakes

David Lyon

 

Three chinese men, each burly, poker-faced, and dressed in black, shuffle to one side of the bullet elevator as Steve Kok and I pass through the door. As we ascend to the 21 Club, the VIP rooms on the 21st floor of the Casino Lisboa in downtown Macao, Kok nods at the stacks of saucer-size chips that the gamblers hug to their chests. “That’s one million Hong Kong dollars each,” he says, either confident that the men do not speak English or unafraid of rattling them. “It won’t be enough.”

Kok, a former blackjack dealer, oversees gaming operations at the Hotel and Casino Lisboa. He notes that minimum bets at the 21 Club are HK$100,000 (about US$13,000), which means that our elevator mates each have just 10 hands to risk. It is a chance they are happy to take: When the door opens, the threesome practically sprints to the metal detector marking the entrance to the club.

The Chinese are fabled for putting it all on the line, and Macao is the only place in the country where casino gambling is legal. As China mints millionaires at a record pace, Macao is aiming to skim the nation’s new wealth with a casino universe that will dwarf that of the Nevada desert. Developers are pouring billions of dollars into the small peninsula and its two tiny islands, making Macao the largest construction site in Asia. Some operators are Chinese from Hong Kong, but, as in the days of the Opium Wars, Westerners want in on the action. So they are bringing Vegas to China. Vegas, but bigger.

“Macao has been a legendary casino entrepôt,” says William Weidner, president and chief operating officer of Las Vegas Sands Corp. “The Bond movies, the images of the Chinese smoking in an almost opium-den atmosphere—it’s always been a siren song to casino folks.”

Indeed, easy pleasures and petty vices long have been part of the allure of Macao, a former Portuguese trading colony less than 40 miles across the mouth of the Pearl River from Hong Kong. But the seedy Macao of backstreet gambling dens and girls beckoning sailors on the Street of Happiness is more nostalgia than fact.

For the past 40 years, Stanley Ho has held all the cards in Macao. In 1962, the city’s then-colonial government gave the Hong Kong construction magnate and his partners an exclusive license to operate casinos. The deal stipulated that Ho invest some of his profits in Macao’s infrastructure, and he since has funded roads, bridges, a ferry terminal, and an airport, helping to transform a backwater of fishermen and firecracker factories into a modern Asian city.

It is therefore no accident that all roads in downtown Macao converge at the Lisboa, Ho’s flagship property located at the cusp of the old colonial city and the business district. When it opened in 1970, the Lisboa pointed to the future with its spaceship-style architecture, but it also incorporated traditional feng shui principles. From the street, the casino looks like a giant bat, with the mouth as its portal. The chainlike design that encircles the hotel appears to lock gamblers inside, while the lion and tiger guarding the entryway make the players seem like lambs entering the predators’ maws.

Inside the Lisboa, the clangs and dings of slot machines in the casino foyer are barely audible within the dimly lit original gaming hall. Most Chinese head straight for the hall’s tables, where the games demand more nerve than the slots do and provide at least the illusion of requiring strategy and skill. By early evening, the floor is packed as tightly as a crosstown bus, with players standing three deep around the tables, sliding in side bets even if they lack a place to sit.

 

Baccarat is king among the Western games. I watch Princess, as the rhinestone letters on her black sweater identify her, duel a middle-aged man in an orange polo shirt and tan golf jacket, who wears a large jade rock on his finger. It is a HK$1,000 minimum table, and Princess’ hands tremble as she turns over each card. The man bends the corner and peeks beneath every card before flipping it dramatically. Around me, the crowd sucks in its collective breath one moment and lets out involuntary whoops the next. And that’s the quiet group. I drift over to the sic bo and fan tan tables (games based, respectively, on high or low dice combinations and on the number of buttons left after lines of four are removed from a pile), where the raucous crowd is wearing knockoff jeans and polyester, and the bets start at HK$100. Thick clouds of blue cigarette smoke swirl between the tables and the low, carved ceiling of Ho’s gaming hall—a scene straight from The Man with the Golden Gun.

Ho lost his monopoly on local casinos in 2002, less than three years after the laissez-faire Portuguese, who had occupied the region for more than four centuries, returned Macao to the Chinese. The new government terminated the agreement with Ho and opened the industry to a bidding war. When the battle for new concessions came to a close, Las Vegas–based Wynn Resorts, Hong Kong–based Galaxy hotels, and Ho’s current casino operations group (Sociedade de Jogos de Macao) emerged as the winners. A flurry of deals granted subconcessions to Las Vegas Sands and MGM Mirage.

 

Las Vegas Sands was the first newcomer to stake out its turf, erecting a gambling temple of gold reflective glass and red neon (the luckiest colors in Chinese culture) in downtown Macao. Forty-five thousand people were waiting at the doors when the Sands Macao opened on May 18, 2004. The casino had been built in only 14 months and, with 387 tables and 800 slot machines, quickly became the world’s most lucrative, paying back its $280 million investment in less than a year.

Gamblers at the Sands Macao are greeted in the lobby by a 120-foot-long, 25-foot-wide, 50-foot-high crystal chandelier—the world’s largest, according to the casino. Bright lights, flashy glass, and high ceilings represent the new look of Macao gambling, a stark contrast to the dark, cavernous casino floors from the past. Tornado-force fans remove the cigarette smoke from the air.

Until its 600-room tower addition is completed later this year, the Sands has no hotel rooms for the public, just VIP suites, where the Zen minimalist decor is less Chinese in style than that of the Old China whale suites at the company’s Venetian in Las Vegas. Each suite at the Sands has a karaoke room so high rollers can crow (or sing the blues) in private.

Walter Power, vice president of operations for Las Vegas Sands subsidiary Venetian Macao, says that while the average Las Vegas table bet is US$25, it is US$100 at the Sands Macao. The Sands caps the maximum single bet at US$130,000. The Lisboa permits twice that sum. “You can see the ferocity of gaming here in Asia,” the former fighter pilot says while looking down at the casino floor from an upstairs conference room. Gamblers sipping tea poured from carts ignore the Vegas-style entertainment on stage. “These players are not having a good time after dinner,” adds Power. “In China, you go to war with the casino. You face your destiny on the gaming table.”

Macao also is facing its destiny. In the plaza behind the Sands, a time capsule containing official documents from the region’s past was buried on December 19, 1999, one day before the colony reverted to Chinese rule. To welcome back Macao, the People’s Republic of China (PRC) erected a gilded bronze 20-foot-high statue called Blooming Lotus in a Prosperous Era in a plaza in front of the Sands. Like Hong Kong, Macao is a Special Administrative Region (SAR) under the “one country, two systems” policy that allows capitalism to flourish in designated pockets of China. It is already far more prosperous than Beijing could have imagined.

 

In Leal Senado Square, the heart of colonial Macao, the pastel 19th-century Portuguese architecture and black-and-white mosaic pavements evoke the city of Lisbon. (Locals point out with amusement that the Portuguese did not get around to installing the mosaics until they were ready to leave town.) Shops along the narrow pedestrian ways that radiate from the square tout international brand names in electronics and clothing. The outdoor mall follows the rising topography up to the hilltop ruins of St. Paul, the onetime Jesuit stronghold. The 17th-century church and college burned in 1835, but the facade still stands as the city’s most picturesque tourist attraction.

Near the inner harbor, the roads become even narrower. In alleys half-blocked by motor scooters and dogs, doorways open into herbalists’ fragrant shops and pungent stalls filled with live chickens. Down a darker and danker street, a shirtless old man with a sunken chest is stretched out on the plastic lawn chair that clearly doubles as his bed. This is a part of Macao that tourist guides carefully skirt.

But even these shabby quarters are shrinking in the face of gentrification and modernization. One dreary side street is being torn up for new water and sewer lines. The workers also are laying fiber-optic cable. Outside the dense central city, virtually every piece of open land of the 11-square-mile SAR is a construction site.

The windows of my tower suite at the Hotel Lisboa overlook about 20 percent of the estimated $20 billion’s worth of new casinos, hotels, convention centers, and tourist attractions currently in development in Macao. Cranes bristle against the skyline, lifting skeletons of steel into place. If I open a window, I can hear the rat-a-tat-tat of rivet guns echoing over the rooftops. Downtown Macao is the first front in a war that will culminate in a clash of gaming titans in the marshes of Cotai

Thus far in downtown, in addition to Las Vegas Sands opening its casino, the Galaxy group has spruced up a vacant building to create the Galaxy Waldo, a modest hotel with gaming rooms that are hardly bigger than those of a private club. (“A neon bra on an office building,” a Sands employee sneers.) But the Waldo was just a way for Galaxy to get on the board. The company’s first ambitious project is StarWorld, now under construction on a site between the Sands and the Lisboa on Friendship Avenue, which some developers are calling the Macao Strip. The hotel is due to open this summer, and from my window I watch sheathing going up at a rate rapid enough to complete a story every few days.

The vast foundation now acquiring iron near the waterfront is a $750 million collaboration between MGM Mirage and Pansy Ho, the socialite daughter and heir apparent of 84-year-old Stanley. The atrium alone will be three times the size of the Bellagio’s conservatory. The Ho family’s holding company, Shun Tak, also is building a Mandarin Oriental hotel next door that will include two residential towers and a shopping center.

Directly across Friendship Avenue from the Hotel and Casino Lisboa stands the handsome bronze-glass wedge of the Wynn Macau. (Wynn has elected to use the Portuguese spelling.) The resort’s $764 million first phase is opening this fall, and a $350 million expansion is scheduled to debut a year later. The project virtually clones Wynn Las Vegas. Shortly after the Sands opened and the Wynn broke ground, Stanley Ho reportedly announced at a company function, “We are Chinese, and we won’t be disgraced. We will not lose to the intruders.” His first response to the Vegas invasion was to refurbish the Lisboa hotel and install the 21 Club and two brightly lit mini-casinos, the Mona Lisa and the Crystal Palace, in former ballrooms. But the updates to his existing operation were simply precursors to the massive, unmistakably Chinese casino hotel he has under construction on the downtown side of the Lisboa. Here, cranes swing girders like pick-up sticks and acetylene torches hiss from dawn until midnight. In contrast to the Wynn’s cool minimalism, Ho’s new Grand Lisboa is taking shape as a 44-story golden lotus. The 200-table casino base is expected to open this fall, with the tower and its 38th-floor Sky Casino coming to fruition two years later.

 

All eyes are on the same prize. In 2005, Macao was expected to surpass Las Vegas in annual revenues and become the world’s highest-grossing gaming destination. The prospect of luring more Chinese customers into the casinos has the industry salivating. As Las Vegas Sands spokesman Ron Reese points out, “There are 110 million Chinese within a two-hour drive. There aren’t [that many] jackrabbits within a two-hour drive of Las Vegas.”

Most Chinese punters ferry to Macao from Hong Kong or catch a bus from nearby cities on the mainland. High rollers take helicopters from Hong Kong or fly in from Japan, Korea, Taiwan, and Singapore. Next year, construction will begin on a 19-mile Hong Kong–Zhuhai–Macao bridge.

Even with increased access to Macao and with the influx of American-style casinos, no one expects more than a handful of tourists from Europe, the United States, or Australia. But no one seems to care: There is plenty of money in Asia.

Many Portuguese left Macao when the colony reverted to Chinese rule, but João Manuel Costa Antunes decided to stay. “Part of my secret life is going out to see buildings go up,” says the civil engineer, who directs the SAR’s Macao Government Tourist Office (MGTO). Yet Costa Antunes is determined not to let Macao’s unique Chinese-Portuguese culture vanish beneath a tidal wave of construction cranes and casino marquees. The casinos return nearly 39 percent of their gross gaming receipts to the government, and he believes these revenues can help preserve the old Macao and build the new one.

In July 2005, UNESCO designated 25 World Heritage sites in Macao, including the Moorish garrisons and the defensive walls from the era when Portugal and the Netherlands vied for power in the South China Sea, as well as the Guia chapel, where the statue of the Virgin Mary is said to have deflected bullets. Leal Senado Square is a perfect avatar of Portuguese colonialism, while Rua do Felicidade, the former red-light district, has been transformed into a clean-scrubbed version of Naughty Old Macao. A former pawn house now serves as a museum to explain the old money-lending system in which people used the facilities as central storage and as a way to leverage belongings for cash.

Pawnshops remain ubiquitous in modern Macao. In the afternoon, the shops are crowded with gamblers buying gold jewelry and diamond-encrusted watches with their winnings. At night, many day-trippers return to sell those same trinkets to scrape up ferry fare back home.

Macao, which has a population of only 480,000, welcomed 18 million visitors in 2005. That number could double as more casinos and hotels open. And while Costa Antunes has focused his promotional efforts on Asia, he also opened an office in Paris. “I want people around the world to know what’s happening in our city,” he says. “But we don’t expect millions of visitors from France.”

One Frenchman who has embraced Macao is chef Joël Robuchon. He is in town to fashion one of the quarterly gastronomic dinners at his Robuchon à Galera restaurant at the Hotel Lisboa. “I didn’t know where Macao was until I was invited here to create a restaurant,” he admits. “At first, we only had two guests for lunch and three in the evening.” Now, his blowout dinners are booked a year in advance.

The American-style Copa Steakhouse is a big draw at the Sands Macao, but its popularity pales in comparison to that of the bargain-priced 888 Las Vegas Buffet. In this kaleidoscopic array, East meets West with tables of sushi, heaps of raw oysters, hundreds of barbecued ducks, steamship rounds of beef, plates of Black Forest cake, and massive tubs of ice cream.

The couple sitting next to me at lunch at 888 had walked across the border from Zhuhai in the PRC and then taken the Sands courtesy van that deposits guests at the casino door. K.K. Leung, who patiently shows his girlfriend how to master Western cutlery, is emblematic of the new China. The Macao-born mechanical engineer worked in the United States for 18 years. When he lost his job after 9/11, he found China to be the land of opportunity, so he returned to manage a factory for Dutch housewares giant Brabantia. Life is good.

As his girlfriend bites into her third sweet pastry, Leung observes that in Macao, it is “the most prosperous time in 450 years.”

And the lotus is just beginning to unfold.


BETTING ON MACAO

If you have not been invited to stay in the VIP suites at the Sands (www.sands.com.mo), you have only two suitable options for lodging in Macao: the glitzy Hotel Lisboa (+853.377.666, www.hotelisboa.com) and the aging Portuguese colonial–style Mandarin Oriental Macau (+853.567.888, www.mandarinoriental.com). However, at least 15,000 hotel rooms are in development in Macao, with the major casino projects concentrated in three regions: downtown, Taipa Island, and Cotai.

DOWNTOWN
GALAXY STARWORLD
: The Waldo casino was just a quick fix intended to establish the Galaxy hotel chain in the Macao market. This summer, the Hong Kong company will open the 560-room StarWorld, which will have a 200-table casino.

WYNN MACAU: This near-replica of Wynn Las Vegas will open in fall 2006 with 600 guest rooms and a 100,000-square-foot casino. Phase two, which is under construction for a late-2007 debut, will add another 136,000 square feet of casino space.

GRAND LISBOA: Most of the Grand Lisboa’s 800 guest rooms will not be ready by the casino’s fall 2006 opening date, but will be included in the 44-story tower scheduled for completion in 2008.

MGM GRAND MACAU: MGM is off to a late start, but its partnership with Pansy Ho should give the Grand an advantage in a city where business frequently operates on a who-you-know basis. The company plans to open its 28-story, gold-toned hotel/casino in fall 2007 with 600 rooms, 345 tables, and 1,035 slot machines.

MANDARIN ORIENTAL: This Mandarin Oriental hotel, the chain’s second in Macao, will include a residential tower and retail center built by the Ho family’s Shun Tak holding company. The property will be adjacent to the MGM Grand on the Nape waterfront, and is expected to open with 210 rooms in 2009.

TAIPA ISLAND
CROWN MACAU
: This project targeting high rollers will open with a 200-table casino and 256-room hotel in early 2007. The development is a joint venture between Lawrence Ho and Australian businessman James Packer, who heads his late father Kerry’s media empire.

COTAI
VENETIAN MACAO: The world’s largest casino will have 546,000 square feet of gaming floors, 3,000 suites, 850,000 square feet of retail space, and 1.2 million square feet of convention space. The project’s first phase will open in spring 2007, with completion scheduled for 2008.

FOUR SEASONS: Announced in January and expected to open in 2008, the hotel will include 400 guest rooms, up to 600 vacation suites, and multiple spas and restaurants adjoining four seasons: Announced in January and expected to open in 2008, the hotel will include 400 guest rooms, up to 600 vacation suites, and multiple spas and restaurants adjoining the Venetian, which will operate the Four Seasons’ European-style casino of about 50 tables. SHANGRI-LA HOTEL AND TRADERS HOTEL : Two hotels, both managed by Shangri-La, will share a 39-story tower adjacent to the Venetian Macao. Opening in 2008, the upscale Shangri-La will have 500 rooms, while the mid-market Traders will have 1,000.

FAR EAST CONSORTIUM: In another extension of the Venetian, Hong Kong– based hotel management firm Far East will operate five hotels under brands including InterContinental and Dorsett. The complex will contain a total of 3,000 rooms and include 160,000 square feet of casino space; the first hotel is due to open in late 2007.

CITY OF DREAMS: With a casino targeted at punters but suites aimed at China’s millionaires, this venture by the same team building Crown Macau plans to have something for everyone. The project, scheduled to open in 2008, includes an underwater casino and three hotels with a total of 2,000 rooms.

GALAXY COTAI MEGA RESORT: Galaxy’s 2,000-room, 350-table Cotai development should open in stages beginning in early 2008.

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