Macau: a land of two faces

27th March 2014 by RightCasino facebook 4 mins read Category: Features

Macau has been described as Asia’s answer to Las Vegas, but with gambling revenue surging to $45 billion last year (versus Nevada’s $6 billion), it is perhaps more accurate to describe Vegas as America’s answer to Macau . The tiny region on the western side of the Pearl River Delta is a land of contradictions – affluence and destitution, luxury and sleaze, economic growth and ingrained corruption.

As China celebrates the Year of the Horse (associated with luck and prosperity), Macau’s casino tourism shows no signs of abating in 2014. This land of two faces stands as the undisputed casino capital of the world, but do foreign observers truly appreciate the enormity of Macau’s underbelly?

The yin and yang of Asia’s casino heartland

Macau’s split personality is reflected in every aspect of its culture. With influences of Portuguese rule cohabiting with a longstanding Chinese heritage, topped off with the glitz and grandeur of a modern leisure destination, the region is a cultural and temporal hodgepodge.

In order to compete on the international stage as a leisure destination, Macau has spent the last decade developing its cultural industries into something truly special . The 5 star Banyan Tree (Macau’s largest hotel) is an awe-inspiring sight, complete with luxury spas, world-class cuisine and a man-made beach. Meanwhile, the Sands Hotel Macau recently welcomed the Rolling Stones and names David Beckham as a regional ambassador.

However, all this luxury belies a rot at the heart of Asia’s gambling Mecca. Prostitution is legal in the region and serves as a supporting pillar to the casino economy, with many criminal syndicates involved in recruitment and trafficking. Gambling and the sex trade are mutually supportive in Macau, with many women falling prey to false advertisements for casino jobs, only to be coerced into prostitution.

Bribery and money laundering are also rampant in the region. In 2007, a BBC investigation revealed how government officials from mainland China would demand bribes from businesspeople for building permits or gambling licences. These bribes would be forwarded to Macau in the form of chips, which the official would either spend or immediately cash in. The BBC consulted a senior Hong Kong analyst who speculated that the equivalent of £1 billion was laundered annually in this way.

Tackling Macau’s dark side can be a perilous pursuit, as Portuguese lawyer Jorge Menezes discovered last year . While walking with his five-year-old son in Macau, he was assaulted in broad daylight by two men brandishing bricks, leaving him hospitalised. Menezes speculated that the attack was linked to his legal activities, which targeted institutional corruption.

Dealing with the ‘middlemen:’ an uneasy alliance

The economic ascendance of Macau can be attributed to a number of factors, both legitimate and suspect. Above the board, the increasing wealth of mainland China and relaxing of border controls has sent millions of Chinese punters flocking to Asia’s prime legal gambling destination. Macau’s casinos have also proved popular with foreign sharks who take advantage of the region’s generous table limits to fleece inexperienced Chinese businessmen in high-stakes poker games.

However, much of Macau’s success can be attributed to the ‘ junket ’ system, wherein middlemen loan cash to high-rolling whales from the mainland and arrange their accommodation in exchange for a commission from casino managers.

Former intelligence officer Steve Vickers states that the junkets are “an integral part of the gaming scene” because they facilitate the breaching of China’s strict capitol controls, which limit the amount of cash that can be legally taken out of Macau to 20,000 yuan ($3,262.)

Vickers contends that most junkets are in the pocket of the Triads, with healthy chunks of their commissions used to fatten Mafioso wallets. However, the dubious legality of these transactions is typically overlooked by the Chinese authorities – perhaps owing to the fact that the junkets are responsible for the lion’s share of Macau’s gambling revenues (72% in 2011.)

Furthermore, the international influence of Macau is expanding, with many Western casino groups profiting from the region’s prosperity. Wynn Resorts’ posted a 25% rise in the value of its Asian operations in the last quarter of 2013. Now, the company is committing $4 billion to a new resort on the Cotai Strip, which will boast 1,500 hotel suites with their own massage rooms and 80-inch television sets.

However, international business relations with Macau have had the unwelcome side-effect of importing the region’s criminal element to Western shores . The decline of casino tourism in the United States has forced many American brands (including Wynn Resorts, Las Vegas Sands and MGM Resorts) to rely on their business partners in Macau for increased footfall from the East.

With these professional relationships have come junket operators. Chinese nationals are renowned as big-spenders, and junket recruiters are increasingly important to American casinos keen to lure in these lucrative customers. However, Nevada investigators have privately conceded that they “are having a hard time establishing which of them [the junkets] have criminal connections.”

The price of success?

While Macau has clearly benefited from the strength of its casino market, this East Asian success story conceals a far darker narrative from public view.

Between Triad rule, illicit money flows and a widespread sex trade, it is unclear whether Macau’s newfound wealth has been a blessing or a curse for its population. Samuel Huang (associate professor in gambling studies at the Macau Polytechnic Institute) is ambivalent, speculating that Macau’s meteoric growth has been too rapid: “You really don’t know whether society as a whole has benefited,” he commented.

On the whole, Macau remains a safe place to live, with few violent crimes reported annually. However, the region’s general crime rate did increase by 2.7% in 2013, leading Macau’s Secretary for Security Cheong Kuoc Va to express fears that the region was becoming a trafficking hub for prostitutes and drugs.

It remains to be seen whether Macau can shed the unsavoury elements in its burgeoning economy and, much like Vegas, pursue the image of a legitimate leisure destination. However, if the recent downturn of the Vegas casino market is anything to go by, this new King of the casino world might struggle to have its cake and eat it.

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