Inside Asian Gaming

May 2014 inside asian gaming 15 Coutinho cites shortcomings in affordable housing, health care, education, public sanitation and transport. “Although we have more revenue, the quality of life is moving downwards. Gaming revenues are not well-spent on behalf of the people due to corruption and misspending.” Mr Coutinho, who also heads Macau’s Civil Servants Association, suggests, “Gaming operators could do better by providingmore direct benefits to their staff, such as housing and kindergartens. I hope they can apply the revenue to those who need it: the handicapped, single parents, the elderly.” He also laments the lack of local touches in new developments. “It’s a pity that the architectural structures of the operators don’t take into consideration the history of Macau. Designs don’t match the history and key role of Macau in southern China. I hope in the future building can be designed in connection with the history of Macau and have some connection to its heritage.” Regulatory reform also receives mixed reviews. “Financially you can’t dispute that Macau has been a runaway success. But as far as being a well-regulated gaming environment, some international regulators have been disappointed,” Spectrum Asia Chief Executive Paul Bromberg observes. “Unfortunately, Macau is no more transparent than it was. Look at the recent Carson Yeung money laundering judgment in Hong Kong. [Mr Yeung, owner of England’s Birmingham football club, was convicted in March of laundering nearly US$100 million, including funds linked to Macau casino and VIP operations.] The amount of shady business has increased in line with growth of the business as a whole.” Others dispute that. “Macau has a regulatory system which strikes a reasonable balance between respecting the rights of concessionaires to operate their businesses and the public interest in ensuring that games are fair and that criminal influence in the industry is minimized,” Mr Green asserts. gaming liberalization feasibility study for the Macau government. “US operators did not understand the concession system, or indeed Macau’s legal system. The concise nature of Civil Law was liable to be confused with an absence of law.” MGM Mirage, predecessor to MGM International Resorts and the Vegas Strip leader in 2001, mounted an indifferent bid in partnership with Hong Kong’s New World Development, the property arm of STDM investor Cheng Yu Tung’s conglomerate. Las Vegas No. 2 Park Place Entertainment (owners of Caesars World and later to be renamed Caesars Entertainment), partnered with Strip rival Mandalay Bay to bid. Harrah’s Entertainment, soon to become the largest operator in the world by number of properties with the purchase of Caesars, didn’t submit a proposal and later passed on a second chance. “A big mistake,” CEO Gary Loveman has admitted repeatedly. Atlantic City casino mogul Donald Trump sent his son to Macau but didn’t bid. Steve Wynn, who’d been instrumental in developing the integrated resort model that transformed Las Vegas into a tourist destination, had just sold his Mirage Resorts to MGM and showed enthusiasm for Macau. So did LVS founder Sheldon Adelson, who’d made conventions a Strip staple. But LVS was wary of Nevada regulators’ view of Macau and strapped for cash in the wake of the 9/11 attacks, so came to the table as a management company, not an independent bidder. Along with STDM, which had spun off its casino operations as Sociedade de Jogos de Macau (SJM), the two Las Vegas outsiders emerged as winners. Who Dat? “Everybody knew who Stanley Ho was. Everybody knew who Steve Wynn was,” a Macau gaming executive who requested anonymity recalls. “Venetian? There was a lot of skepticism. There were a lot of different stories.” Sweeping aside suspicions of bribes and meddling by Beijing, insiders contend LVS found favor largely on the strength of its promise to promote the convention business and build a replica of its Las Vegas flagship, The Venetian, on Cotai, a swath of reclaimed land joining Macau’s outer islands of Coloane and Taipa. The six square kilometers of Cotai had been futilely earmarked for residential development and then for high-tech manufacturing. Macau authorities embraced LVS as the Venetian initiative grew into a US$13 Directly elected Legislative Assembly member Jose Pereira Coutinho cites shortcomings in affordable housing, health care, education, public sanitation and transport. “Although we have more revenue, the quality of life is moving downwards.” “The participation of international gaming companies, particularly those with assets in North America, had a tremendous impact on regulatory standards,” Global Market Advisors partner Andrew Klebanow believes. “While the regulatory regime that was introduced with gaming liberalization was robust, the scrutiny placed on that regulatory body and the casino operators in Macau forced the regulatory authority to implement far higher standards. One cannot compare Macau today to what existed pre-liberalization.” Cover Story >>