Under China's Watch, Macau Won't Return to 'Gangster's Paradise'

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Aug/27/2012
Under China's Watch, Macau Won't Return to 'Gangster's Paradise'

(Reuters) - Three murders, hammer-wielding heavies, and a high-profile police swoop have raised concerns that Macau, the world's casino capital, may be backsliding to the bad old days of the late-1990s. And that's even before ex-triad boss "Broken Tooth" ends a 15-year jail sentence in December.

All this at a time when China's  economy, the world's second-biggest, is growing more slowly - hitting gambling revenue and possibly making junket operators, who collect gambling debts in exchange for commission from casinos, more aggressive.

But on the former Portuguese colony's narrow, bustling streets and inside the glitzy, fortress-size casinos, there's little indication the violence is spiralling out of control in the only place where Chinese nationals can legally casino gamble.

Much has changed in the past 15 years in Macau, a special administrative region on China's southern coast. Then, the seedy gambling enclave was plagued by open gang warfare. Bombs went off in the streets and shoot-outs broke out in broad daylight.

In 1999, Macau seceded from Portugal to China and, now, Las Vegas tycoons including Sheldon Adelson and Steve Wynn have helped transform the territory into a multi-billion dollar goldmine, a magnet for high-rollers and global investors. Gaming revenue last year was $33.5 billion, more than five times that of Las Vegas.

The key, say security forces, political analysts, lawyers and academics, is that China is in control.

"Number one: the Chinese government will not tolerate it (rising violence). Number two: if you look at the structure of the VIP room operation in Macau, it's a completely different story from 1998," said Davis Fong, a director of the Institute for the Study of Commercial Gaming at the University of Macau.

The murder and mayhem in the late-1990s was sparked by the triads' aggressive manoeuvring to capture more of the lucrative VIP gambling market, which accounts for over 70 percent of total revenues.

Today, most of those operating Macau's VIP rooms - select areas in casinos that target the big spenders who drop more than 1 million yuan $156,900 (99,165 pounds) at a time - are companies, rather than individuals, investing in a lucrative market where total monthly revenues are still rising. Analysts expect August gambling revenue to show a pick-up after a quarter of subdued growth.

Security officials, though, say the industry junkets which operate these rooms often have links to triads or gangs.

Police raids this month and last, codenamed "Thunderbolt" and held in conjunction with Hong Kong and Chinese authorities, detained more than 300 people and resulted in 3 jail sentences, 22 suspended prison terms and 15 people still in custody. The main crimes were drug use, illegal immigration and fake documents.

Local residents say the Macau police undertake "clean-up raids" every month or so, and they didn't see the recent swoop, which had wide media play, as anything special. "There are frequent checks on all the casinos, karaoke and nightclubs and sauna parlours," said one local man, who didn't want to be named.

Despite slowing growth - gambling accounted for more than 40 percent of Macau's total GDP in 2010 - the government is developing large-scale infrastructure, and new properties are going up alongside the glass towers and casinos that make up the Cotai Strip. Beijing has incorporated Macau into China's Five Year Plan and wants to position it as an international leisure destination, reducing its reliance on casinos.

WARNING TO OTHERS

Hoffman Ma, deputy chairman of Success Universe Group, which has a joint venture with casino king Stanley Ho's SJM Holdings to operate Macau casino Ponte 16, said the local government opted for a high-profile police raid as a warning to others.

"The major junkets don't want this (more violence). Many of them are involved in other industries and have been using their connections to get into other businesses like bullion and forex in Hong Kong. They're diversifying," he said.

Given Macau's small size - about a third as big as Manhattan - word gets around quickly and China would have little problem quashing any potential escalation in violence, said David Zweig, Chinese politics expert at Hong Kong University of Science and Technology.

"They would probably just put pressure on the Macau government to really crack down. They might send in an adviser or two, but you wouldn't see an influx of mainland police ... that would scare people," he said.

Visitors to Macau - and there were 28 million last year - don't seem scared.

At the palm-fringed Grand Lapa luxury resort, where two people were murdered recently inside the hotel, guests milled around the busy lobby on a weekday afternoon, queuing to check in. Staff at a nearby Chinese medicine store said there had been no impact on local residents.

"The hotel murders are related to the gambling industry. Macau is safe, everyday people don't have to worry," said a doctor working at the store.

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