From Commercial Appeal
In just a decade, the center of gambling has migrated from Las Vegas to a tiny Chinese territory an hour’s ferry ride from Hong Kong.
The gambling mecca of Macau now handles more wagers than all U.S. commercial casinos put together. But as U.S. gambling companies have remade Macau, Macau has also remade them.
Amid a soft regulatory climate in America, U.S. gaming companies have been hit with allegations of improper conduct, including allowing Chinese junkets linked to Asian gangs into Las Vegas.
Macau is the only place in China where gambling is legal. Each month, 2.5 million tourists flood the glitzy boomtown’s neon-drenched casinos. Most gamblers are newly rich Chinese, attracted after China assumed sovereignty of Macau in 1999 and opened it to outside gambling operators.
“It was a swamp,” said Sheldon Adelson, chief executive officer of Las Vegas Sands, which led Macau’s gaming expansion. Adelson and American rivals Wynn Resorts Ltd. and MGM Resorts succeeded spectacularly.
Adelson’s first casino opening caused a stampede that ripped doors off their hinges. Now operating four booming casinos in Macau, he described Sands as “an Asian company” with a presence in America — and legal issues in both places.
In May, a Las Vegas jury found against Adelson, awarding a Macau consultant $70 million for helping Sands secure a lucrative gambling license in Macau. Las Vegas Sands immediately appealed.
Adelson’s firm is also accused of making improper payments to a Macau lawmaker and collaborating with the Chinese mafia. The U.S. Department of Justice and the U.S. Securities and Exchange Commission are investigating. The company says it’s done nothing wrong.
Wynn and MGM also have faced legal and regulatory troubles. Among MGM, Sands and Wynn, only MGM operates in the Tunica County gambling district near Memphis.
Like early Las Vegas, Macau has a long history of ties to crime syndicates. Machine-gun shootouts, bombings and assassinations of government officials were common during gambling magnate Stanley Ho’s four-decade monopoly.
Macau’s history and regulations continue to make it tricky for modern casinos to avoid gangs, illegal money transfers and at least the appearance of bribery.
One contributing factor is China’s limit on the amount of money citizens can take out of the country, including to Macau, a semi-autonomous region with its own financial system. Another is the lack of reliable credit risk information in China, which makes it hard for casinos to figure out whom they should lend to.
An industry known as junket agents provides an easy fix. Agents identify wealthy gamblers, whisk them to Macau’s VIP tables, lend them money, then settle up when they return to mainland China.
