Staff & Wire Reports |
Macau celebrated its 10th anniversary of Chinese rule yesterday, a decade marked by the extraordinary transformation of this once seedy Portuguese colony into a glitzy international gambling capital.
The tiny territory, best known as a dingy casino town in the past half-century of its 400-year history as a Portuguese colony, returned to Chinese rule on December 20, 1999, as its economy was shrivelling and warring Chinese gangs were frightening away tourists.
Since then, violence has subsided and the economy has exploded. The one place in China where gambling is legal, Macau boomed after the Government broke up a local company's long-standing monopoly seven years ago and started welcoming United States gambling powerhouses like Wynn Resorts (WYNN), Las Vegas Sands (LVS) and MGM MIRAGE (MGM).
As the operators built one flashy casino-resort after another, gamblers showed up by the millions - the overwhelming majority of them from mainland China - and profits surged. By 2006, this enclave had surpassed the Las Vegas Strip as the world's most prosperous casino center.
Yesterday, Chinese President Hu Jintao celebrated Macau's economic success as he swore in its new leader, Fernando Chui, who was selected by a 300-member committee. The 52-year-old is a former Culture Minister.
"It's always been clear Macau's proximity to China was favorable, but the liberalization of the casino industry has succeeded beyond anyone's expectations," said Jonathan Galaviz, an independent gaming and tourism consultant. "If you said 10 years ago that Macau would have accumulated billions of billions of new capital dedicated to one industry and thrived like this, few would have believed you."
Toward the end of 2008, Macau's casino industry started to cool as the economic crisis took hold and China visa restrictions slowed the influx of gamblers. Revenues swooned, multibillion-dollar casino projects were halted and thousands of workers laid off.
But the casinos, thanks to the strength of China's economy, are teeming once again. In October, Macau posted its best month ever, raking in US$1.59 billion in gambling revenues. That was about double Nevada's US$800.3 million take during the period.
American casino companies have become ever-more reliant on their foothold in Macau. Las Vegas Sands raised $2.5 billion in a Hong Kong initial public offering of its Macau business in recent weeks. Wynn Resorts reported its operations in the Chinese territory accounted for more than half its overall revenues during the latest quarter.
Macau's industry faces a threat from Singapore, where two major casinos are expected to open in the coming months and could siphon off big-betting VIP gamblers.
The better to help Macau compete, Chui may re-examine and ease the local gaming tax, analysts say.
Chui is expected to focus on ways to attract a more diverse range of tourists and to improve the local infrastructure.
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