Developers Bet on Macao as the Next Gambling Capital

MACAO —  When Macao’s civic leaders announced plans last year to break up a long-standing gambling monopoly and invite bids for three new casino operating licenses, it was the first step toward a big dream.

Their vision was simple but ambitious: Transform this sleepy, slightly seedy gambling enclave into a glitzy gaming, convention and tourist center--a Las Vegas East, an Asian Atlantic City.

Macao’s proximity to a huge potential market of Chinese gamblers and the fact that most of the 10 million visitors who came last year headed straight to the casinos made interest intense.

A special government commission sifted through 18 proposals, including ones from Donald Trump, MGM Mirage Inc. and a Monte Carlo syndicate, before deciding in February on two of the biggest names on the Las Vegas gaming scene: Steve Wynn and Sheldon Adelson.

The third license went to the holder of Macao’s existing gambling monopoly, a flamboyant 80-year-old named Stanley Ho. A larger-than-life character, Ho has been married four times, has 17 children, a personal fortune in the billions and a stake in just about everything of real value in Macao.

The selection has set up a classic battle between total opposites for what could become one of the world’s biggest gambling markets.

On one side are a pair of experienced outsiders with impressive track records of taking gambling mainstream. One Las Vegas casino executive who knows both men described them as “two of the biggest independent tigers in the world.” On the other side is the ultimate insider, a Chinese businessman whose knowledge and control of the local scene give him enormous power.

“I don’t see how anyone can start a gambling business here without dealing with Stanley,” said longtime resident Warren Rooke, a local businessman.

Wynn discovered that quickly enough. As the American started negotiating for a prime spot of land to erect a $500-million resort, he found himself across the table from the man who controlled it: Stanley Ho.

For all involved in Macao’s transformation, the stakes are high.

Macao, one of Europe’s first colonial outposts in Asia, was ruled by Portugal for more than four centuries until, like its bigger neighbor Hong Kong, it reverted to Chinese rule 21/2 years ago. Today, the wealth of China’s newly rich is nowhere more visible than around Macao’s gambling tables. For those coming on organized tours, the smallest gambling chip costs $12; the largest, $12,500.

“It’s a transforming moment in Macao’s history,” Wynn said in a telephone interview from Las Vegas. “We’re going to have a helluva place there.”

Adelson was said to be unable to comment for this article because of Securities and Exchange Commission rules that block public comment during the refinancing period of his Las Vegas casino, the Venetian.

For Ho, who at first fought the planned changes but now talks of leading them, the battle brings genuine competition for the first time since he purchased Macao’s gambling monopoly 40 years ago. It’s been a lucrative business ever since.

Mainly through his principal holding company, best known by its Portuguese initials STDM (Sociedade de Turismo e Diversoes de Macao), Ho today controls all 11 of Macao’s casinos, its five-star hotels, a major bank, the horse track, the dog track and a lucrative online betting service. His money built Macao’s new 1,100-foot-high observation tower and its convention center. He is the largest shareholder in the region’s airline, Air Macao, as well as the new airport. He owns the high-speed ferry service and a helicopter link with Hong Kong that together bring the majority of Macao’s visitors.

Collectively, taxes from Ho’s business interests account for about 60% of Macao’s annual government revenues.

For Macao, the dream isn’t so much about survival as it is ending an era. The move represents a fundamental shift for a quiet backwater that lost its role as a main trading gateway to China well over a century ago to Hong Kong. Macao has lived comfortably since then off what one local dubbed “the three Gs”--gambling, graft and girls.

Although the stakes in Ho’s casinos are high, the slightly rough, hard-edged ambience inside them is not.

“It’s like being in a Greyhound bus station,” said Rooke.

Like Hong Kong, Macao enjoys the status of a special administrative region within China and a similar quasi-autonomy from Beijing. Its population of 450,000--one-fifteenth that of Hong Kong--lives amid the rolling hills of a small peninsula and two tiny islands that add up to just over 9 square miles.

The main architect of Macao’s vision for the future is its dynamic, 47-year-old top political figure, Chief Executive Edmund Ho, a Canadian-educated son of a respected local community leader. He is no relation to Stanley Ho.

Well into his third year on the job, he enjoys popularity ratings between 70% and 80% because of his successes and his plans for the future. Shortly after taking over, he cracked down on an epidemic of gambling-linked violence that had given Macao an aura of Al Capone-era Chicago. The region’s most notorious gangster, known as Broken-Tooth Koi, quickly ended up behind bars.

In addition to broadening its gambling appeal, Macao plans a $125-million Fisherman’s Wharf tourist attraction replete with an African fort and an erupting volcano. The government has also hired New York-based Chinese architect I.M. Pei to design a science and technology museum.

Although the government leader restricts his media contacts to occasional news conferences and rarely grants personal interviews, an eager young team around him stresses that the changes are essential to guarantee long-term prosperity.

“It’s extremely important,” said Eric Ho, executive director of Macao’s Trade and Investment Promotion Institute, and no relation to either Stanley or Edmund Ho. “If we can succeed, people not just in greater China but elsewhere in the [East Asia] region will come to see Macao as a destination in itself.”

The change is especially important to absorb the job losses expected with the decline of Macao’s second industry, textiles. The enclave’s export quotas, set by international agreement, are expected to end in 2005.

Central to Macao’s transformation is expanding its attraction beyond the current hard-core, moneyed gamblers.

“The high rollers have been very good for us, but if you look at the Las Vegas model, it’s easy to see the potential for developing Macao as a family-oriented entertainment center,” said Eric Ho, who was also secretary of the casino license-tendering commission.

The selections of Adelson and Wynn appear to fit Macao’s ambitions.

Wynn, who arrived in Las Vegas as a liquor distributor, built his empire on marketing flair and an instinct for what people want in their free time. In the process, he helped change the image of Las Vegas from Sin City to a glossy, family-friendly town. His Bellagio is the grandest hotel on the Strip.

In an hourlong telephone interview, Wynn left little doubt that he believes a similar formula can work in Macao.

“Entertainment attractions of the first order, high-end shopping, eating in fanciful restaurants--it’s going to be an amazing place,” he predicted. “Look around Asia--Hong Kong, Taipei, Tokyo, Singapore--there’s nothing that can come close. You don’t have to do a deal with the devil; just make a nice place and treat people well.”

He said that negotiations with the Macao government for a 20-to-25-year casino license were “99% complete” and that he expected to sign a final agreement in the next two to three weeks. He said he planned to spend about $500 million on a hotel-casino complex.

Adelson is best known for his ability to draw convention business. He struck gold in Las Vegas by launching the mammoth computer industry Comdex convention many years ago, then selling it to bankroll the Venetian as the Strip’s first all-suites hotel catering to businessmen, and targeting the convention trade.

According to Macao authorities, Adelson’s Galaxy Casino Co. has pledged to invest $1 billion to build an Italian-style casino resort complex replete with gondolas plying Venice-like canals. Adelson is said to be nearing completion of complicated negotiations.

Despite all this, Stanley Ho shows no signs of slowing down--whether it’s his weekly tennis games, ballroom dancing with his 40-year-old wife, Angela, or expanding his existing business empire to meet the American challenge.

A few days after the three new licenses were granted, he announced a $600-million plan to build a luxury hotel for mainstream customers and an exclusive private club for high-stakes gamblers.

“He’s helped modernize Macao,” said STDM senior executive Joaquim Morais Alves. “I think he’s looking forward to the competition.”

Despite investment commitments measuring well into the billions of dollars and talk of more to come, many locals fret about whether Macao can really make the leap from gambling den to family draw. They look at the rough-and-tumble customers with their big chips, the loan sharks circling the tables ready to stake losers with new cash, and the young Chinese prostitutes waiting just outside for a share of the action, and wonder if the distance might be too great.

Still, even among seasoned residents, there is a guarded optimism.

“We’re certainly not geared up for this yet,” said Father Lancelot Rodrigues, a 78-year-old Roman Catholic priest whose preferred daytime beverage is a tall scotch and water. “Today, they [gamblers] come in at 4 in the afternoon, gamble until 4 in the morning and then go down to the wharf and leave. But we’ve got a golf course, good food and, if the new licensees come, then our future could be bright.”

Added Promotion Institute director Eric Ho: “We don’t have to duplicate Las Vegas, we just have to draw the right lessons from it.”

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Times staff writer Tom Gorman in Las Vegas contributed to this report.