Tuesday, May 26, 2009

The Vegas of the East

Macau, a former Portugese colony in southern China, is setting itself up to one day overtake Vegas as the gambling capital of the world.

From Forbes:

Photo from macau.a2zcasino.eu

HONG KONG/LOS ANGELES, May 26 (Reuters) - The world economy may be slumping, but don't tell that to Macau -- the former Portugese colony which is set to trump Las Vegas heading out of the worst global downturn since the Great Depression.

In the smoke-filled gambling halls of Macau's MGM Mirage casino, hundreds of Chinese gamblers were crammed around tables flipping cards, playing roulette and rolling dice on a recent day, seemingly unaffected by the slowdown.

The ace up the sleeve of Macau, the world's biggest gambling market, is this steady influx of risk-loving Chinese flocking to the only place in China where casinos are legal. Las Vegas, on the other hand, is saddled with a stagnant U.S. economy and glut of new casinos preparing to enter the market.

"We've seen better-than-expected performance in the overall gaming market of Macau," said Credit Suisse ( CS - news - people ) analyst Gabriel Chan. "Vegas is still suffering and will take a longer time to recover, but in Macau, we are beginning to see the light at the end of the tunnel."


Read On
One of the most amazing stats I've heard about Macau is this: there are approximately 3.1 billion people within a five hour flight of Macau. That is incredible. Talk about a primo location.

In the past several years, Vegas' image has been revived. People of my generation have really lionized the place. I'm a little bit confused by this actually. My home city, Kansas City, has a number of casinos. I've never been to Vegas and I'm not completely aware of everything it has to offer, but this kind of competition has to hurt the place. Kansas City is no Vegas, I know that. But there are a wide selection of places one can choose from if he or she wishes to go gambling in Kansas City. For this reason, it's not surprising to me Vegas is being hit hard during the current downturn.

The fact that gambling is illegal in China is going to be great for Macau. That, combined with China's rise, and Macau's close proximity to the masses of Asia is going to make Macau a Mecca of gambling going forward.

9 comments:

Thomas said...

Las Vegas is being hit very hard indeed...:

http://miscellaneous-economic-ramblings.blogspot.com/2009/05/las-vegas.html

Ramesh said...

Oh Yes, Macau is perfectly placed. The Chinese love to gamble, but I am not sure they are allowed to go to Macau freely - number of trips is a year is limited to 2 or so I think. Still all that will change in the future. And then competition will spring up on the mainland too.

Mark said...

That's a interesting post you made, Thomas.

It's crazy to think how far off Vegas' numbers are off from last year, which was also a down year. Certainly not good heady times in Vegas.

Anonymous said...

The Chinese government severely restricted their citizens from entering Macau earlier this year. I don't know if those restrictions have been lifted. The government is taking a dim view of citizens squandering their money in Macau instead of spending it at home during this time of belt tightening.

Hopfrog said...

I live in Vegas and work at Caesars Palace which I believe still has the highest table limits in the world. I see people (mainly overseas Asians and mainly Chinese) betting $150,000 per hand on a daily basis. As far as gaming revenue goes, Macau already beats us. But people have been writing the epitath for Vegas for many years now, and let me give you some insight why Vegas will never die.

First they said California will kill Vegas once it got it casinos, our revenue and California traffic jumped. Then when other states around the country like Arizona and now Florida got theirs, it was gonna hurt. Nope not even a dent. Vegas is more than gambling, its an experience. Even people that can gamble in their home states will still get the urge to come to Vegas for the real experience. Like you said, Vegas has become iconic in our culture. Even with Macau so close to home, the Chinese big whales flock to Vegas during Chinese New Years because its no substitute for playing high limit Big Bacc at Caesars.

Yes the current economy has crushed Vegas. Numbers are way down and I see it everyday. Macau offers so many gmaing tables and with so many people that close, they will now be the revenue kings, but Vegas will never die.

Mark said...

Great insight, Hopfrog.

Picturing Chinese business tycoons throwing around millions of dollars on Vegas tables in my mind is a funny scene.

Hopfrog said...

Yeah its kinda sad really. I have access to all their account information and a lot of times its someone who is president of a state owned business. I see these people throwing that kind of money around and think about all the workers who are so underpaid over there and I really feel pity. Pity for the poor in China and pity for the wealthy who would rather blow in one hand of blackjack, in literally two seconds, what could be used to provide food and wages for dozens of people. I could go on about how the chasm between the rich and poor in China illustrates the success of that form of government in meeting its stated goals, but hey, things aren't that much better here either.

Mark said...

I wonder how much money is lost by Chinese gamblers trying to show face and trying to impress those around them. I'm sure that's an a part of the excitement for a lot of high rollers in Vegas. But that aspect of Chinese culture would shine so brightly at a casino, I reckon.

Good point on the US politicians. They're currently gambling US taxpayers money away on bailouts and other bailing out Wall St. Can only imagine what they do at a blackjack table.

Helder Fraguas said...

A very good text on Macau, a wonderful place.
Helder Fraguas