Macau, an autonomous region of China situated 65 km west of Hong Kong, is the international king of gambling towns. Last year, revenues for its 30-plus casinos totaled $33.5 billion, more than five times those of Las Vegas. Only in recent months has the global financial gloom started to dent the territory’s gaming intake, which at times has grown 70% annually. Still, record turnover is expected again this year. These phenomenal numbers would seem to suggest that Las Vegas Sands, Wynn Resorts and MGM Mirage — the big American players that entered Macau after the former Portuguese colony liberalized its gaming industry in 2002 — have hit the jackpot. But don’t bet on it. The U.S. operators went into the gambling enclave on short 20-years-or-less gaming licenses with no guarantees of renewal. They are reliant on mainland-Chinese punters for business, which in turn puts casinos at the mercy of Beijing’s immigration controls (mainlanders need a travel permit to visit Macau) and currency restrictions (mainland visitors can only take just over $3,000 with them). This also forces them to compete for the lucrative custom of high rollers — responsible for as much as 70% of revenue — brought to Macau by infamously shady promoters known locally as “junkets” after the lavish gambling sprees they organize. Even more worryingly, allegations of improper, and in some cases illegal, conduct in the territory are coming back to haunt — and potentially hurt — U.S. operators on their home turf. Tough domestic anti-money-laundering laws and Nevada gaming-license controls can be revoked for malpractice in foreign jurisdictions, making Macau something of a poisoned chalice. (VIDEO: Poker Comes to China) To be successful in Macau, casino operators need to establish the right connections both locally and in the mainland. Efforts at cultivating this guanxi are at the root of the problems now facing the American firms there, with the U.S. Department of Justice and the Securities and Exchange Commission currently conducting probes into whether Wynn Resorts and Las Vegas Sands have violated the Foreign Corrupt Practices Act. In both cases, what began as internal company![]()
