Is Macau Mirroring Las Vegas’ Shady Past? Some Experts Think So

Posted on: July 8, 2013, 05:30h. 

Last updated on: April 27, 2015, 05:45h.

Back when Bugsy Seigel and the Mob ran Vegas, an unpaid gambling debt could easily find you in an alley getting your kneecaps whacked, and payola was as accepted a part of the business as cash counts and hookers. Then between Howard Hughes in the 1960s and intense FBI scrutiny of casino practices in the 1980s, the whole industry in Vegas went from underground to legit, and from corrupt to corporate. Today, every move in a casino is recorded, and anything considered off-kilter is reviewed by the Gaming Commission and held to a strict set of regulations, but that was certainly not the case in the gambling mecca’s first few decades.

Most Lucrative Gambling Spot

Now Macau – which in merely ten years has taken over as the most lucrative gaming epicenter in the world, pulling in more bets than all U.S.-based land casinos combined – seems to be picking up the slack in the corruption and shady practices department, and American casino companies are finding it’s a fine line to walk, as they remain under the watchful eye of the U.S Department of Justice no matter where they operate. But sometimes, when in Rome, you know what you gotta do.

“There are some countries where you either have to pay to play and break the law, or you have to not do business there,” Indiana-based casino consultant Steve Norton said. “I think the jury’s still out on Macau,” he added coyly.

From Swamp to Swank

Macau is only half the size of Manhattan, but plays host to some 2.5 million tourists – many of them the world’s top “whales”, or wealthiest gamblers – and it’s currently China’s only legal gambling destination, though that looks to be changing in the not-too-distant future. The current Macau has replaced what was once small-time gambling dens that operated openly in the city’s more working-class neighborhoods and were a far cry from the glamorous experience that mainland China’s newly fortunate class now enjoy. It all changed in 1999, which was when the mainland took over Macau as a “special administrative district” and outside and legitimate gambling purveyors, including major U.S. players like Las Vegas Sands, Wynn and MGM, entered the scene and began to make bank hand over fist.

And in the beginning, as with Vegas, it was certainly considered a gamble.  “It was a swamp,” said Sheldon Adelson, CEO of Las Vegas Sands, reflecting on his early days in Macau. “Everybody thought that I was crazy.”

Also like in early Vegas, crime syndicates ran the place, and in many people’s eyes, still do. Bill Weidner, president of Las Vegas Sands until 2009, has this politically correct statement on the gambling business infrastructure there:  “Macau is their country, not ours, and it’s their system not ours, and it operates differently than ours. It’s not better or worse, just different.”

Nobody wants to ruffle the feathers of a Chinese gang, not even a corporate muckamuck.