Mythbusting Macau

Macau is the Chinese Vegas! Cotai is the new Strip! Wow, look at Macau! Gaming media—this magazine non-exempt—has been spreading the hype about Macau ever since the market began to emerge from its Ho family monopoly in 2002. And with revenues surpassing Las Vegas’ just five years later, in 2007, and continuing to wallop them ever since, posting $13 billion in first quarter earnings this year, compared to Las Vegas’ $10 billion for all of 2010—not to mention the 42 percent year-over-year increase Macau saw in May—it isn’t even really hype at all. There’s absolutely no hyperbole about it, Macau is the No. 1 gaming market in the world. However, to say that Macau is the Chinese Vegas or that Cotai is the new Strip isn’t entirely accurate. In fact, it’s rather misleading.

As a long-time editor at CEM, I thought I had a pretty good handle on Macau. I’d read the press releases, I’d seen the pictures, I’d crunched the numbers, and quite a few articles written by people who live and work in Macau had passed over my desk on the way to the pages of this magazine. As far as I could tell, casinos were casinos, and Macau might as well have been a new extension of the Las Vegas Strip for all its obvious likeness … of course, with the addition of Chinese gamblers and their steadfast superstitions, an emphasis on “VIP,” and a certain exotic air of seediness fed by kung fu movie clichés and the extended Ho family’s tabloid exploits. Then I moved to China, actually visited Macau, and realized how far from reality my ideas about Macau and its casino market had been.

Of course, there was the MGM, the Hard Rock, the Venetian, all looking just about the same as they do in Las Vegas, neon lights, faux facades and all. And of course, gambling is gambling, no matter the culture. But whatever you think you know about Macau, unless you’ve lived it, is probably half true at best. To help everybody else get a better handle on Macau—which, considering the numbers, is now a must—I’ve set out to bust or bolster the top myths and misconceptions Westerners tend to hold true about Macau.

Myth: Macau is part of China.
Fact: Technically, yes, Macau is part of China. However, China—the People’s Republic of China—is a massive, 1.34 billion-people-strong (at last official count) conglomerate of Communism-cum-capitalism, run by a central party that, for one reason or another, allows certain geographic regions more economic, political and personal freedoms than others. Macau is one such “Special Administrative Region” (SAR), controlled by its own governing body, issuing its own currency, the MOP, and writing its own laws, yet lacking a military and generally expected to follow the mainland’s party line. As the Chinese describe it, “one country, two systems.”

But—and this is a big but—in practical application, Macau is not Chinese. Sure, it is inhabited by Chinese people who speak Chinese, but everything that really makes China Chinese is absent—aside from a love of bureaucracy, rapid growth and a few deep-seeded cultural norms to be discussed later. Four hundred and forty-two years of Portuguese colonization and the influx of foreign capital and goods it has continued to enjoy since it became an SAR in 1999 have left an undeniable and lingering Westernized twist on Macau.

After two years as an American living in and traveling throughout China, both urban and rural, I can only begin to describe “Chinese,” as there are such wide disparities between economic classes, provinces and regions. However, the constants that I have observed from north to south, urban to rural are general dinginess, maddening inefficiency, suffocating crowds and an utter disregard for traffic laws. (Please note that I do not mean to blindly prop up negative stereotypes here and that I really do respect China and the Chinese.) Macau is simply too clean and orderly to feel truly Chinese. This isn’t necessarily a bad thing, and for an upscale tourist destination, it’s probably a very good thing. But it is something to be aware of when trying to understand the Macanese gaming market in the context of China, which supplies the bulk of its gamblers.

Myth: Chinese people love to gamble.
Fact: OK, there has to be some truth to this one, too. After all, all those billions in gaming revenues have to come from somewhere, right? However, in my—albeit anecdotal—experience, the average Chinese person is too practical to gamble. And too good at math, a fact that might feed a certain stereotype but is generally true due to the Chinese university entrance exams’ focus on higher-level mathematics. Whenever I mention that I work for a gaming magazine to my Chinese students or colleagues, they usually express an interest in visiting Macau along with an absolute disinterest in actually gambling there. In fact, in two years, I’ve only met two Chinese people who expressed any interest in gambling—one man in his late 20s who said he would love to gamble if he could afford to lose, and one woman about the same age who said she would love to gamble there as long as she was spending her American boyfriend’s money. In short, they know the odds and they’re not willing to take the risk.

However, gambling is a numbers game, and if China has anything, it has numbers. Within any given population, to quote John Acres, you will likely find a certain percentage of people with both the propensity and the proclivity to gamble. In China, with its give-or-take 1.34 billion people, if even 1 percent has the desire and means to gamble, it’s game on.

Myth: Chinese gamblers hate slot machines.
Fact: It is true that Chinese gamblers don’t seeming to be playing slot machines in Macau, with that segment bringing in only between 5 percent and 6 percent of revenues. When I was in Macau, literally the only person I saw playing the few available machines at any of the casinos I toured was a Westerner, and a gaming industry employee at that. This, however, doesn’t necessarily mean that Chinese gamblers hate slot machines. In fact, as far as I can tell, a certain demographic of Chinese people actually enjoy the basic concept of putting a coin in the slot to spin the reel and, if you’re lucky, winning more coins. In every arcade in every Chinese city I’ve ever been to—and this is quite a few arcades in quite a few cities—there is a room full of games that adhere to just that method of play, and those rooms are always at capacity, full of average-looking 20- to 30-something young men smoking cigarettes and mechanically feeding tokens into the slot.

The language barrier has prevented me from figuring out whether there is a hidden element of skill in these arcade games, but there doesn’t appear to be. I also don’t know whether these men would be likely to gamble in Macau if they had the means, and if so, whether they would play slot machines there, but I do doubt it, as the baccarat tables simply offer better odds and more auspicious atmosphere.

However, slots in Macau, like everything else, are a growth market, with that 5-something percent up from less than 2 percent in 2004. Whether that growth will continue as this generation of players of arcade “slot machines” climbs the economic ladder is yet to be seen.

Myth: Macau is cheap.
Fact: Ha! If you want cheap, go to China. Macau is expensive. If you’re a local who knows where to find the downscale restaurants and hole-in-the-wall gaming halls, it might be possible to do Macau on the cheap. However, between the Louis Vuitton, Gucci and Chanel boutiques—all licensed and legitimate—and sky-high table minimums, Macau isn’t just upmarket in its advertising. It aims for luxury, and it delivers at a markup.

Myth: Macau is corrupt.
Fact: Macau is proactive and public in fighting the major abuses of authority that the Chinese system of guanxi (“connections”) can bring, and like Hong Kong, it established an independent Commission Against Corruption when it reunited with the mainland as an SAR. Corruption, however, is culturally relative. If you ask a mainland Chinese person if Macau is corrupt, they will likely shrug and look at you like you are stupid. While Westerners consider corruption as morally unacceptable—not to mention obviously illegal—the Chinese concept of corruption is a lot less sinister and usually a whole lot less serious from a legal point of view. In China, in practical application, corruption is not so much a crime as a varying degree of willingness to bend the rules to benefit yourself and your loved ones. In other words, friends and family, and authority figures, get favors. This is a given.

So, while by Western standards Macau may appear to be overrun with gray-area dealings and personal favors, to the Chinese this is perceived, though perhaps not entirely welcomed, as business as usual. To call Macau corrupt is applying a standard of judgment to a cultural norm that isn’t looking to be judged—this is another area where Macau is arguably Chinese. That this system leads to suspicions of triad ties and money laundering, and recently in the case of Las Vegas Sands Corp., outright accusations of bribery is, however, something that most Chinese would consider an unfortunate—yet rather unavoidable—abuse of the system. Whether the results of the investigation of Las Vegas Sands Corp. will be enough to change that system is yet another thing that is yet to be seen.

Myth: Macau is the new Las Vegas.
Fact: Sure, Macau’s gaming revenues eclipsed Vegas’ almost five years ago, and sure, Macau is chock full of the same mega-casino brands you’ll find on the Strip. Of course, there’s the gambling. But everything that makes Vegas Vegas, the iconic vacation destination of debauchery and lost weekends, a hub of vice and scrumptious sins, is missing from Macau. In Macau, nary is a single call girl’s card to be seen littering the streets, nor will you find a single gaggle of trashed bachelorettes sipping yard-long cocktails through naughty-shaped straws. The closest thing to cleavage I saw in Macau was on a CGI mermaid swimming across an LCD wall in a casino lobby on Cotai. Of course, there are plenty of gamblers who come to Vegas to play, not to party, but for most of the general population, including a fair share of those who visit Las Vegas, it just isn’t the same without the vice.

Now I’m sure Macau has its own fair share of sex, drugs and K-pop, but as is true in the rest of China, all the good stuff is behind closed doors, cordoned off and reserved for the rich, privileged and well-connected. Walking down the street as a casual visitor, Macau is only the new Vegas if Vegas got Sani-wiped.

Myth: The Cotai Strip is the new Las Vegas Strip.
Fact: The Cotai Strip is under construction. Really, there’s not much there besides the Venetian, City of Dreams and the new Galaxy Macau. Sure, these pockets of decadence and excess are surrounded by several massive construction sites and will likely resemble the Strip more closely in an impossibly short amount of time, but for now its neon lights are lonely—and far outshined by the Las Vegas Strip, Fremont Street and even Reno. Heck, Laughlin might even blink brighter. The major action in Macau is actually still on Macau Peninsula, which is home to the iconic Grand Lisboa and its surrounding neon jungle of casino complexes. Despite the Macau government’s intention for Cotai to become casino central when it built up the land from ocean floor, it proved faster and easier for concession holders to build on the Macau Peninsula first. All the big projects, however, are on their way to Cotai, including Sands’, Wynn’s and SJM’s next mega resorts.

Myth: No one is allowed to go to Macau.
Fact: CEM, in the past, actually might have propagated this myth, reporting on tightened visa restrictions over the last few years that were aimed at limiting the number of mainland Chinese allowed into Macau. And it is true that China has made it more difficult for mainland Chinese to cross into Macau to gamble over the past few years. Chinese bureaucracy, however, usually has a back door, and in this case that door opens to Macau in the form of organized tours and VIP junkets. While the “free travel” scheme, where Chinese citizens apply for their visas independently, is seeing smaller quotas, the number of visitors to Macau is still able to increase each year, as tour and VIP operators aren’t held to the same regulations.

Myth: Macau casinos are the casinos of the future.
Fact: While Macau casinos might serve as role models to the casinos to come in new Asian markets, Macau casinos are not the much-heralded—with their own heaps of hype—Casinos of the Future! Server-based, Internet and hand-held gaming devices actually haven’t even started to be seen on the floors of Macau casinos, and the flow of technology is still West to East. This might come as a surprise considering the (very much accurate) Asian penchant for new technology, and I’m actually still struggling to understand why exactly this is the case myself. Whether it’s because the manufacturers are mostly Western or because the players simply like their cards, or another combination of factors, I just don’t know. And that’s the thing that’s really important to understand about Macau and China and Asia in general. No matter how much you think you know about this market, there’s always, always, always a lot more left to learn.

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