Moguls Throw Dice on Macao
American billionaire Stephen A. Wynn will make one of his biggest gambles this week, when he opens a sleek, $1-billion hotel-casino in Macao -- the booming Chinese territory that could soon bump off Las Vegas as the world’s gaming capital.
Wynn is betting that his lavish rooms and trendsetting casino, which opens Wednesday, will attract the Chinese gambling masses eager to wager the money they’ve been raking in from the country’s sizzling economy.
But his critics doubt that the crescent-shaped Wynn Macao complex -- a smaller replica of his Las Vegas resort -- has enough attractions to succeed in this former Portuguese enclave on China’s southeast coast.
Macao, which returned to Chinese rule in 1999, is the only place in China that allows casino gambling.
For 40 years, the industry was controlled by local tycoon Stanley Ho. But Ho’s monopoly ended in 2002, when the government began shaking up the market and inviting new competition from Las Vegas.
Only two Las Vegas companies were allowed into Macao: Wynn Resorts Ltd. and Las Vegas Sands Corp. -- run by Wynn’s arch-nemesis, Sheldon Adelson. Sands, which owns the Venetian casino resort on the Las Vegas Strip, got to Macao first. It opened the gleaming Sands Macao, which has been wildly successful, in 2004.
Last year, Macao’s income was about even with the $5.3 billion earned on the Las Vegas Strip, according to figures from both locales. Many analysts expect Macao to surpass the Strip if the new casinos prove a good bet.
To be successful, the newcomers must transform Macao into an Asian Vegas: a multi-day destination for people who want to shop, see shows, eat in fancy restaurants and attend conventions -- as well as gamble.
Macao has never been like this. Rather, it has been known as a seedy day-trip destination with old, smoky casinos, prostitution and organized crime. It mostly pulls in high rollers from mainland China or Hong Kong -- just an hour east by high-speed ferry -- whose favorite game is baccarat played in private rooms.
Chinese gamblers are notorious for being solely focused on gambling. They spend most of their time at the tables with few distractions other than cheap meals.
Wynn and Adelson are lauded as visionaries who transformed Las Vegas into a popular place for a business convention and even a family vacation. They intend to do the same in Macao. Adelson plans to attract a bigger crowd by adding convention space, and Wynn wants to lure them with luxurious resorts.
The Wynn Macao’s website promises to offer “unparalleled luxury” and set “new standards of hospitality and entertainment” with six gourmet restaurants, a shopping esplanade, Las Vegas-style entertainment, health club, pool and spa. The complex also has 200 tables and 380 slot machines.
JPMorgan Chase sounded bullish about Macao in a recent report. “High quality new supply can create new demand,” the investment bank said. “We believe new projects will attract new visitors, resulting in significant growth for the overall market.”
But in another recent report, Morgan Stanley was skeptical about the new casinos’ ability to change gambling and spending habits in Macao. “Simply adding facilities will not be enough as there are already good restaurants and hotels in Macao and Chinese gamblers choose not to spend money on eating and staying at those establishments,” it said.
Macao is not only shaping up as a rivalry between some of the biggest figures in the casino world, but it’s also a site of competition between different parts of the territory of 173 square miles. Macao is constituted by a peninsula of China’s mainland and two islands: Coloane and Taipa.
Wynn Macao is on the peninsula, but Adelson of the Sands believes that most of the business will eventually move to the Cotai Strip, an area of reclaimed land that connects Coloane and Taipa.
Adelson is developing a massive project on the Cotai Strip that will include casinos, a huge convention center and hotels by many industry leaders: Hilton, Sheraton, Shangri-La and Four Seasons. Adelson’s 3,000-suite mega-resort, the Venetian Macao, is slated to open in the second quarter of 2007.
He scoffed at Wynn’s claims that the Wynn Macao was a full, or “integrated,” resort. “There’s no resort around it. There’s no 50-meter swimming pool. There’s no wave pool. There’s no exhibition center,” he said.
Adelson also predicted that Wynn would have to close some of the six restaurants at the new casino.
“He really thinks that the curved building and the slanted roof is the greatest thing since sliced bread and therefore the whole world should beat a path to his door,” he said.
