‘Las Vegas of Asia’ tells casinos to grow beyond gambling
BEIJING (AP) — Losing money due to COVID, the American casino giants that helped make Macao the “Las Vegas of Asia” face a fresh challenge: The tiny Chinese territory wants them to help reduce its reliance on gambling by paying to build theme parks and other attractions.
The former Portuguese colony stayed out of business decisions for decades and now is aligning with official strategy on China’s mainland, where foreign companies are required to help pay for the ruling Communist Party’s development ambitions, profitable or not.
The licenses of MGM Resorts, Las Vegas Sands, Wynn Resorts and three Chinese rivals that invested billions of dollars in Macao expire in December. Rules released in early July say any that want to operate over the next 10-year period face an added requirement to invest in “non-gaming projects.”
Casinos face still more financial pressure after they were ordered to close this week, along with most other businesses, while Macao tries to control a renewed coronavirus outbreak. They already were operating under rules imposed in late June that limited the number of their employees to 10 percent of normal.
The territory of 700,000 people crowded onto a 30-square-kilometer (12-square-mile) peninsula jutting into the South China Sea near Hong Kong is the biggest global center for gambling but is under pressure from Chinese President Xi Jinping’s government to rely less on its dominant industry.
Beijing wants theme parks, entertainment and conventions to attract more nonChinese visitors. Even before tourist travel was shut down to fight COVID in 2020, the mainland was trying to limit the flow of gamblers across the fenced boundary that separates Macao from Guangdong province.
Macao is “dedicated to steering the composition of industries towards adequate diversification,” said its economy secretary, Lei Wai Nong, at a May 31 government meeting.
An added complication for the Americans: Relations between Xi’s government and Washington are strained by disputes over trade, technology, human rights and other irritants. Other companies have been hit by retaliation for US tariff hikes, but Macao casinos haven’t been targeted.
“There is a high risk that at least one, if not two, may not get a new concession,” said Ben Lee, managing partner of IGamiX, a gambling industry consulting firm in Macao. “Why would 50 percent of such a dominant industry in Macao be ceded to foreigners, particularly Americans?”
Pressure for change comes as Macao faces growing competition for potential nonChinese gamblers from casinos in Singapore, Malaysia and Cambodia.
Financial analysts expect MGM, Sands and Wynn to be approved for licenses due to the jobs and tax revenue they generate. Their casino hotels with thousands of employees soar above the narrow lanes of Macao’s centuries-old city center and Cotai, a strip of land reclaimed from the sea.
Still, the risk an established operator might fail to receive a license “should not be ignored,” Fitch Ratings said in a June 16 report.