When Macau started casino liberalisation in 2002, it had been four centuries since the city led the world in anything besides pork chop buns and pawn shops.
In the 1600s, Macau was the linchpin in Portugal’s East Asia trade routes, at the heart of efforts to spread Christianity, as evidenced by the façade of Saint Paul’s Church and other structures from that era in the Historic Centre of Macau, a Unesco World Heritage site. It took another modern medieval European building, the Venetian Macao, to make Macau great again.
Since the Venetian Macao opened ten years ago on August 28, 2007, Macau’s casino revenue has virtually quadrupled, from HK$55 billion in 2006 to HK$217 billion last year, nearly five times the intake of the Vegas Strip. Macau visitor arrivals have expanded from 22 million to a projected 32 million this year.
The Venetian Macao’s HK$21 billion investment spurred an additional HK$200 billion in resort development to create the Cotai Strip, an Asian version of Vegas’ centrepiece. That investment includes huge shopping malls, world class attractions and 24,000 added guest rooms that will this year generate an incremental HK$8.5 billion in revenue. For Sheldon Adelson, founder and chairman of Venetian Macao developer Las Vegas Sands (LVS), the resort completed his ascent from court jester to global casino king.
Appropriate for a project evoking Italy’s city of canals, the Venetian Macao arose from beating back the sea. LVS, now operating in Macau as Sands China, proposed building a mega-resort but there was no suitable site on the Macau peninsula, home to the main casino district. When Adelson was shown the available land, he claims to have asked, “Where is it?”
“Cotai was under water. It was just a mud flat,” former LVS President and COO William Weidner recalls. The unwanted 6.7 square kilometre reclamation astride the causeway linking Macau’s outer islands of Coloane and Taipa – hence Cotai – had been left unfinished after plans for computer chip fabrication and then a residential new town sank. But Cotai offered LVS a canvas for a supersized version of its Venetian resort, opened in Las Vegas in 1999.
Built on thousands of pilings driven into the landfill, Venetian Macao was conceived in 2003 as the world’s third largest building at nearly 1 million square metres. Its 3,000 suites represented a one-third increase on Macau’s 2003 room inventory. The 92,600 square metre Shoppes at Venetian would more than triple Macau’s total retail space. Convention and exhibition space of 111,500 square metres was 25 times larger than Macau’s biggest meeting venue. The 15,000 seat Cotai Arena was a dozen times larger than the city’s biggest theatre. The casino, measuring upwards of 34,000 square metres, with 878 gaming tables and 3,300 slot machines, was similarly larger than any Macau competitor and three times the size of the biggest in Vegas. All that under the same roof as Piazza San Marco, Ponte Rialto and canals with singing gondoliers.
Local scepticism about Venetian Macao abounded, from cab drivers to reigning casino king Stanley Ho even after thousands of eager punters broke down the doors to open Sands Macao in May 2004 and the property earned back its initial HK$2 billion investment in nine months. Ten times costlier and stuck out in the middle of a swamp, Venetian Macao was a risk of an entirely different magnitude. But Adelson had convinced one group he’d seen the future of Macau: Wall Street.
“Adelson opens Sands, a small casino on the peninsula, and it does amazing. He then tells the world to wait until he opens his really big casino across the bridge on Cotai,” said Alidad Tash, LVS Director of Strategic Planning in the run up to the opening of the Venetian.
When LVS debuted on the New York Stock Exchange in December 2004, it began a two-year run of Adelson’s wealth increasing by US$17.5 billion, just under US$1 million per hour, the fastest rise on record. He reached number three on the Forbes 400 list of richest Americans and number six in the magazine’s global ranking before losing money faster than anyone in history for a year, whipsawed by the 2008 global economic crisis and a mainland crackdown on Macau visas to slow its breakneck growth.
WATCH: Casino mogul Steve Wynn on his US$4.2 billion resort in Macau
Today, Adelson’s US$34.1 billion places him 20th globally and first among casino magnates, trouncing erstwhile LVS Macau partner Galaxy Entertainment Group’s Lui Chee Woo in second at US$12.1 billion in 110th place and burying arch rival Steve Wynn’s US$2.5 billion in 814th place.
The Venetian, now bracketed by three more Sands resorts and a half-dozen others completed or under construction by competitors in Cotai, racked up HK$77 billion in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) in its first decade, nearly US$1 billion a year. Half of all Macau tourists visit the Venetian, still attracting 75,000 people daily. Not bad for a second generation, grotesquely enlarged photocopy of what Macau already had.
Muhammad Cohen is a contributor to Forbes Asia, Editor at Large of Inside Asian Gaming and wrote Hong Kong On Air, a novel set during the 1997 handover about TV news, love, betrayal, high finance and cheap lingerie