The boomtown days look over for Macau, regardless of when China’s corruption campaign ends
When Chinese President Xi Jinping began his crackdown on corruption in late 2012, it was clear that the gambling spa of Macau was going to be collateral damage, packed as it was by cadres with cash, bearing bottles of Viagra and looking for several different kinds of action.
Three years on, the carnage in China is unprecedented. Almost 75,000 party members have been investigated by the Central Commission for Discipline Inspection and tens of thousands have been arrested and the campaign shows no sign of abating. That means a trip to Macau for a Chinese official has all the implications of stepping on the third rail. By one estimate, revenues are down by 48.6 percent along the Cotai strip, the onetime mudflat that has been filled to create a Las Vegas-style ribbon lined with gambling parlors.
That doesn’t mean, however that China’s gamblers have given up. Instead, they have fanned out across Asia.
“What is happening is that this massive crackdown is affecting Macau materially in that the slightly dodgy are now going to the Philippines, Laos, Vietnam, Cambodia, Australia, anywhere they feel the Chinese don’t have an eye on them,” said Steve Vickers, chief executive officer of Steve Vickers Associates, which specializes in country risk and has long experience in observing gaming in Macau. “They are trying to remain as anonymous as they can.”
The beneficiaries are casinos almost everywhere, and in particular, South Korea and the Philippines – except for Singapore, Vickers told Asia Sentinel. The gunshy punters believe Singapore is too regulated and too likely to let China know about where the big spenders are spending government money.
How big a windfall the casinos have come into is unknown. Neither the casinos nor the punters want to advertise. But probably the biggest beneficiary is Genting Berhad, the Kuala Lumpur-based conglomerate that has become the world’s biggest gaming operator, according to Luis Pereira, the publisher of the Macau-based Asia Gambling Brief, which keeps an eye on the regional industry.
Genting’s Resorts World unit in 2009 opened Resorts World Manila, an integrated entertainment complex including three hotels, a mall, a performing arts theatre, cinemas and the country’s largest casino in Pasay, not far from the Manila Airport. It is unwatched by Chinese authorities and is a convenient 90-minute flight from the mainland, nearly perfect for a quick, unobserved jaunt to try the tables.
Although gambling has been legal since 1976 and is regulated by the Philippine Amusement and Gaming Corp (Pagcor) under the office of the president, Resorts World’s complex kicked off a new round of construction. Today there are 20 casinos in Metro Manila, the latest being the US$1.3 billion City of Dreams, a 6.2 hectare behemoth not far from the airport on Manila Bay, which operates buses for the gamblers. Its beneficial owner is SM Corporation, controlled by billionaire Henry Sy, a Chinese Filipino with interests in supermarkets and other retail operations, in a joint venture Melco International Development, controlled by Lawrence Ho, the son of Stanley Ho, who for decades held a monopoly on gambling in Macau.
In South Korea, according to Pereira, while there are seven casinos operating in the country, the beneficiaries are on Jeju, an island off the Korean peninsula with mild and relatively warm weather. Last year Jeju hosted more than 4 million visitors from the mainland, Japan and China. The flight between Seoul and Jeju is said to be the busiest air route on the planet. It is home to yet another of the 60-odd casinos that Genting operates around the world – 47 of them in the UK. The Chinese, Pereira said, prefer Korea because it is geographically convenient and the Chinese and Korean cultures mesh.