Vegas Plays to the World

By Julie Rawe

The most remarkable feature of the flashy new Sands Macao casino, according to Asian high rollers, isn't the 60-ft.-tall windows or the 50-ton chandelier or even the opulent bar offering 200 kinds of tea (free!). No, for big spenders accustomed to the dingy, smoke-choked quarters of China's only legal gaming district, the highest praise for the first American-run casino goes to its ventilation system. "It doesn't feel stuffy," marvels local resident Tong Tin-Chung, "so you won't get dizzy." And the Sands is offering more than clean air--there are sequined showgirls, megaplex-size TVs and a 300-ft.-long buffet--all designed to reel in mainlanders like Li Duoshan, a businessman from nearby Zhuhai, who once dropped a six-figure sum in one of Macau's VIP baccarat rooms. Li has lost money at the Sands too, but still pooh-poohs its competitors: "There's no music, no shows. Except for gambling, there's nothing else to do."

Look out, seedy vice dens, Las Vegas is going global. Macau, Britain, Thailand and even squeaky-clean Singapore--which until this year had banned the G-rated business of selling chewing gum--are being bombarded with billion-dollar investment offers from the same companies that made a strip of Nevada desert synonymous with over-the-top entertainment. The sudden urge to export Vegas-style casinos stems as much from regulatory reform abroad as from limited growth opportunity at home. Indeed, after MGM Mirage announced plans last month to build a casino in Macau, Merrill Lynch predicted that the development would will add five times more value to the company than its proposed mega-merger with the Strip-centric Mandalay Bay.

So far, Vegas casino operators are placing their biggest bets on China, where the Middle Kingdom's age-old penchant for gambling is dovetailing with the world's fastest-growing economy. Chinese millionaires are being minted every day, and the World Trade Organization predicts that the country's booming middle class will encompass half a billion people by 2014. "And frankly," says MGM Mirage CEO Terry Lanni, "there's not much to do with that money there to enjoy yourself."

Enter Macau, the former Portuguese colony handed over to China in 1999. Last year some 12 million visitors poured into the 9-sq.-mi. territory, whose small contingent of casinos generated $3.6 billion in gaming revenue--three-fourths of what the Vegas Strip managed to pull in. Long a mecca for Asia's high rollers, Macau in 2003 averaged a daily haul of nearly $22,000 per gaming table compared with just $2,200 in Vegas. And thanks to the recent removal of certain internal travel restrictions, some 150 million mainlanders can now head to Macau without a tour guide as chaperone. "We're extraordinarily fortunate to be on the doorstep of China," says Bill Weidner, president of Las Vegas Sands, which opened the Sands Macao in May.

Despite the influx of big spenders, Macau is still a far cry from America's glamorous Sin City. For the past four decades, the government endorsed the casino monopoly run by local tycoon Stanley Ho, 82, who failed to fully modernize even his flagship Hotel Lisboa. In the run-up to the 1999 handover, rival loan sharks inspired many of the turf wars in the gangster-ridden colony. Violence escalated to the point that in 1997 Macau's Secretary of Security reassured tourists that they were unlikely to get caught in the crossfire because the city had "professional killers who never miss their targets."

In an effort to clean up the territory's casino culture--and to profit from it--China ended Ho's choke hold on the industry in 2001, launching a bidding war for two additional casino licenses and slapping a 39% tax on all three. One of the new license holders is Steve Wynn, who is credited with reinventing the Strip in Vegas. "Right now, Macau is for the gambler--period," Wynn told TIME last month before breaking ground on a $705 million wonderland to be flanked by the old Lisboa and a planned joint venture between Ho and MGM Mirage. "The trick is to add other dimensions to the town, open the door to more people."

The other American licensee, Las Vegas Sands, averages more than 30,000 visitors a day at the $240 million Sands Macao, which uses the Portuguese spelling. But the Sands, with its golden facade and shimmering neon-purple fountain, will have some serious sibling rivalry in 2006 when its parent company finishes building an $800 million replica of the Venetian Resort Hotel Casino, complete with imitation canals and singing gondoliers. Sands chairman Sheldon Adelson is so gung ho about Macau that he is enlisting partners in a $10 billion project to duplicate the Vegas Strip on a sliver of reclaimed land between two of the territory's islands.

To help establish a beachhead, they have carefully blended all the Vegas pomp at the Sands Macao into an Asian vibe. A feng shui master helped design every detail of the casino to ensure that the elements were in harmony, from replacing the slot machines' winning trio of 7's with lucky Chinese 8's (in Chinese, the word for "eight" rhymes with the word meaning "get rich") to rounding the high rollers' area with beehive curves to encourage its inhabitants to "leave their honey." The staff is more polite than the Chinese have come to expect. "If you don't tip them, they'll still remain friendly," says Gigi Chan of Hong Kong, who notes that some of Macau's less refined dealers "will yell at you or even take your chips away."

Asia isn't the only angle in the global casino game. Britain, which already sends the most foreign visitors to Vegas, is another big target. According to the Innovation Group, a consulting firm based in New Orleans, 71% of Brits have done some gambling in the past year, but so far they have preferred horse races, slot machines and lotteries to their country's casinos, which are either snobbishly high-end or seriously ho-hum. Vegas has responded with a flurry of deals. The MGM Mirage plans to build a handful of midsize casinos, Harrah's seeks to sprinkle 8 to 10 smaller facilities throughout the country, and the Sands wants to install spiffy entertainment complexes at a few British soccer stadiums. But Britain's most sought-after locale--London's Millennium Dome--went to Bahamian firm Kerzner International, best known for the Caribbean's coral-pink Atlantis resort, which announced last week that it had finalized an agreement to build a $350 million casino in the coveted redevelopment project along the Thames.

But all those deals are contingent upon Britain's scrapping several gambling restrictions next year, including a ban on casino advertising and a 24-hour waiting period for first-time patrons. Last month, when Parliament indicated that it may cap the number of slot machines at the largest casinos at 1,250 (roughly half the number in the Bellagio), Las Vegas Sands threatened to curtail its multibillion-dollar deals. "Most U.S. operators are jumping in with both feet," says Scott Fisher, managing director of the Innovation Group, "but with a big life raft attached."

U.S. casino executives are trying to sweet-talk other governments too. Although Thailand and Singapore have yet to legalize gambling, MGM Mirage's Lanni has met with the Thai Prime Minister to discuss a potential development, and the Sands' Weidner in May offered Singapore $2 billion to put a casino resort on its Sentosa island.

As the Sands Macao starts to woo Asia's VIP gamblers with access to private jets and special high-limit gaming areas, a major goal of exporting such rarefied Vegas amenities is to persuade more foreigners to ante up on the Strip. Nevada last month became the first state to open a tourism office in China, but it is not allowed to promote its gambling facilities there--"which means the best way to promote Vegas properties is to wine and dine 'em in Macau," says Bill Thompson, a gaming expert at the University of Nevada, Las Vegas. The Strip is ready and waiting for Asia's big spenders. The Venetian, for one, has added a VIP baccarat salon with marble floors and a gazillion decorative teapots. And for homesick Chinese gamblers, bird's-nest soup is now available at the hotel--for $150 a bowl. --With reporting by Neil Gough, Carmen Lee and Austin Ramzy/Macau and Laura A. Locke/Las Vegas

With reporting by Neil Gough, Carmen Lee and Austin Ramzy/ Macau and Laura A. Locke/Las Vegas