Inside Asian Gaming

INSIDE ASIAN GAMING | February 2011 22 shareholders at STDM will need the tacit approval of Beijing, even if they don’t receive a formal coronation from the central leadership. This is not merely nostalgia in Beijing for the early days of the PRC and Macau’s indirect role in sustaining the communist government. As a senior industry insider recently told Inside Asian Gaming : “Everything that happens in relation to the gaming industry inMacau is political—either at the local level or the central government level. China didn’t win back control of Macau after 450 years of foreign occupation simply to hand it back to foreigners via the backdoor of global capitalism.” The awardingof the STDMmonopoly in1962was attributedat the time to the company’s willingness to invest in tourism infrastructure. The full name of the company—Sociedade de Turismo e Diversões de Macau—echoes that. Under Portuguese rule, gaming has been legalised in Macau since 1847. The first casino monopoly franchise was granted to the Tai Xing Company in 1937, but it was reportedly too conservative to exploit the full potential of the industry and only Chinese games were played in the casinos at that time. Sheriff Stanley The new 1962 monopoly was also sold politically to the Macau community and the outside world as an attempt to re-organise and regulate the existing gambling industry, which had reportedly become infiltrated by triad gangs in the preceding decades. Current officials of the New Jersey Division of Gaming Enforcement might be interested to learn that back in 1962, Stanley Ho was considered one of the ‘good guys’ by the Macau government and hired to clean up the place. It was only in 1984 that STDM started allowing the casino-within-a-casino system (i.e. junket rooms managed independently of the casino licence holder and issuing credit to players) that today so concerns Western regulators and governments. To understand how Macau got its post-Second World War reputation for being the ‘Wild East’ and simultaneously China’s ‘Mr Fixit’, we need to go back a little to the 1940s and early 1950s. China’s communist regime had been in power for less than one year when in 1950 it became embroiled in the Korean War, supporting the communist North against the Western- backed South. From that year, the West imposed trade sanctions on China and its ally North Korea. Although the war (unofficially) ended in 1953, those sanctions continued right up to 1957 at the insistence of John Foster Dulles, US Secretary of State at the time. Although China had a socialist economic system aspiring to self-sufficiency in all essentials, it, like present-day North Korea, still needed access to foreign currency and international traders to buy essentialssuchasmedicalsupplies.Fromroughly1950onwards,Hong Kong- and Macau-based middlemen such as Henry Fok come into the picture. They supplied China with essential materials, accepting non-convertible renminbi as payment. They then used renminbi to pay for Chinese and Korean goods tradable on the world market including ginseng, honey and textiles such as silk. Those goods were then exported to the rest of the world in exchange for convertible SJM Succession Stanley Ho—originally hired to clean up Macau? Bank squeezed—the administration centre of Banco Delta Asia in Macau