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COVER STORY First of two parts: Next week: Reporter Richard N. Velotta travels to Macau to examine how Las Vegas has shaped the hottest gambling center in the world. the doorstep of mainland China with a history of gambling stretching back more than a century. Macau, the only place in China where casinos are legal, is the site of a resort gold rush sparked by the opening of the market to foreign competition in 2002. With a dozen casino resorts built in just seven years, the region has accomplished in less than a decade what took more than 50 years in Las Vegas. Baccarat, the game favored by high-rolling Chinese gamblers, has fueled that boom and generated a ripple effect on the Las Vegas Strip, where such gamblers congregate in the United States. Baccarat players wagered a record $10.7 billion T 18 last year on the Strip, a 24 percent increase from 2009 and amid an economic downturn. That was about 17 percent of all wagering on slots and other casino games last year, a share that has grown since Las Vegas operators have built versions of their resorts in Macau. Those are table crumbs compared with the baccarat action in Macau. Its $23.4 billion in gambling revenue last year, mostly from baccarat, was twice that of Nevada's, and it is three times what Nevada generated through June this year. The surge in baccarat revenue is the one major effect that Macau and its exponential casino growth have had on Las Vegas, now running a distant second to the Chinese enclave in gambling volume and profits. Otherwise, the emergence of Macau as the world's gambling leader seems little known or seen in Las Vegas, where gambling accounts for a minority of Strip revenue and is increasingly taking a back seat to other forms of entertainment. Just how profitable Chinese high-rollers are for Las Vegas is also uncertain, as catering to high- rollers is a risky—and expensive—enterprise. Much as the spread of casinos across the United States helped build interest in Las Vegas, Macau is expected to benefit Las Vegas and Nevada more than its luring away high-rollers will harm us. Still, he story behind why baccarat has rocketed past craps, roulette and blackjack to become Nevada's highest-grossing table game begins and ends thousands of miles away in China, home to some of the world's most prolific gamblers. More specifically, it centers on a peninsula on HIGH STAKES Las Vegas Strip gamblers, many of them Asian tourists, wagered $10.7 billion in 2010 on baccarat, up 24 percent from 2009. the emergence of an Asian version of Las Vegas presents a double-edged sword for operators of luxury resorts here that aim to keep their biggest customers as close as possible to the gambling action. And it presents new challenges for Western companies accustomed to a different money culture than is the norm in China. Las Vegas resorts have long capitalized on the Asian propensity to gamble by employing casino hosts well-versed in Asian culture to travel the globe cultivating customers. Still, the recent baccarat boom is more about being in the right place at the right time than the result of an aggressive marketing push by Las Vegas resorts to court Chinese gamblers. Rather than focusing on bringing gamblers here, Las Vegas giants rushed to export their product to Macau, which before Western-owned megaresorts had been viewed as a seedy gambling town. The three Las Vegas casino giants granted licenses to operate in Macau have opened six resorts, and more are being built. Those operating in Macau the longest, Las Vegas Sands and Wynn Resorts, have effectively become Chinese companies in that most of their earnings are generated in Asia. Despite the money to be made from Chinese high- rollers and their disproportionate contribution to the state's tax coffers, no public marketing effort in recent years has targeted them. No signs in Chinese welcome tourists at McCarran International Airport. Chinese characters, along with other foreign languages, are absent from the prominent signage at Las Vegas resorts. That puts Las Vegas behind other tourist destinations, especially hotels and other amenities near national parks popular with Europeans and Asians. Nor have casinos gone on a hiring binge for Chinese-speaking hosts and other casino employees who could better attract such coveted gamblers and converse with them. Outside of Chinese New Year, which attracts crowds for Chinese-themed events and entertainment, the influx of Chinese gamblers often falls under the radar in Las Vegas. Asian gamblers prefer high limits and hot tea to the smaller stakes, cocktails and party atmosphere that dominate the Las Vegas scene. The Chinese style of gambling is serious transaction with symbolic significance, in contrast to the more casual carnival that unfolds outside the sequestered baccarat pit. With the exception of Asian gaming pits and restaurants at several casinos and the Asian-inspired décor at Wynn Las Vegas and Encore, there's little to indicate the importance or influence of Asia to the average Las Vegas tourist. High-rollers play in sequestered rooms away from the casino floor or behind closed doors. Encore, Venetian and Palazzo offer little-known upstairs casinos reserved for high-rollers—mostly Asians who prefer to gamble privately. Such attempts fall short of the anonymity offered players in Macau, where most gambling occurs behind closed doors in VIP rooms. Casino operators in Macau rent space in their casinos to third parties that run the games and issue credit to players. "A lot of these high-rolling Chinese gamblers don't want people to know they're rich," said Roger Shaw, executive vice president and corporate product group chairman for Shuffle Master, which is based in Las Vegas and does business in Macau. "They don't want to be known at all." To compete with places such as Macau that allow private gambling, Nevada changed state law in 2001 to allow casinos to reserve private rooms for high-rollers only if Gaming Control Board agents can monitor the action remotely. Previously, all gambling had to be accessible to the public. Since it opened, Wynn Las Vegas has expanded its baccarat area, and Caesars Palace is building four private gaming salons. Some gamblers further hide their play in Macau by making unseen side bets based on the amount they wager at the table. A $100 bet, for example, might actually be a $1,000 or $10,000 bet between the gambler and a "junket operator," who will pay the gambler on the side if he wins or collect against his debt if the gambler loses. While it's unknown whether such underground betting occurs in Las | 26 SEPTEMBER 2011 |