Las Vegas, Half a World Away

SHOW ARTICLE INDEX

JEFF SCHEID/REVIEW-JOURNAL

LAS VEGAS

Half a World Away

Review-Journal gaming reporter Howard Stutz and director

of photography Jeff Scheid traveled to Macau to see how

some of Nevada’s largest gaming companies have helped the

Chinese enclave pass the Strip in annual gaming revenues.

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3COVER ARTICLE INDEX

5PAGE 2 of 576

Las Vegas, Half a World Away

STORIES by HOWARD STUTZ • PHOTOS by JEFF SCHEID • REVIEW-JOURNAL

DIGITAL NEWSBOOK

PART 1 PUBLISHED: OCTOBER 21, 2007

Macau is in the cross hairs of a multibillion-dollar

building boom largely fueled by Nevada’s major gaming

companies, which are exporting Las Vegas-style casinos

into a market starving for action.

4Chinese enclave of Macau booms with Las Vegas-

style casinos, changing its character, future

4Once a monopoly, Macau’s gaming scene

has several players now

4With rising number of visitors comes problem of

keeping up with transportation needs

4Macau Map

PART 2 PUBLISHED: OCTOBER 22, 2007

Thanks to the growing casino industry, unemployment

is just 3 percent in Macau. But where will all the

workers come from to staff the new casinos now under

construction?

4A giant ‘Help wanted’ window

ON THE WEB: Photo slide show and video of Macau from Review-Journal reporter Howard Stutz and director

of photography Jeff Scheid4

www.reviewjournal.com/webextras/macau.

ABOUT THIS DIGITAL NEWSBOOK:

This digital newsbook was produced for the Review-Journal at the Donald

W. Reynolds Journalism Institute in Columbia, Missouri.

www.rjionline.org

3COVER ARTICLE INDEX

5PAGE 3 of 576

Las Vegas, Half a World Away

STORIES by HOWARD STUTZ • PHOTOS by JEFF SCHEID • REVIEW-JOURNAL

DIGITAL NEWSBOOK

PART 3 PUBLISHED: OCTOBER 23, 2007

More than 80 percent of the table games in Macau are

dedicated to the game of choice for Asian gamblers:

baccarat. But the use of slot machines is growing, and

Nevada’s slot makers are trying to capitalize on the market.

4Slots gain foothold in baccarat-dominated Macau

4Bringing more to the table in Macau

PART 4 PUBLISHED: OCTOBER 24, 2007

Macau’s Cotai Strip has more than 20,000 hotel rooms

in various stages of construction. By 2010, the Cotai Strip

will resemble the heart of the Strip in Las Vegas.

4Cotai mirroring style, size of Las Vegas

4Cotai Strip map

PART 5 PUBLISHED: OCTOBER 25, 2007

American gaming giants Las Vegas Sands Corp., Wynn

Resorts Ltd. and MGM Mirage are establishing footholds

in Macau. But an Australian company, in partnership with

the son of Macau’s casino pioneer, is ready to challenge

the experienced casino operators.

4Melco PBL challenges LV companies in Macau

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 4 of 576

n the island of Coloane,

Restaurante Fernando

harkens to a time when

the Portuguese controlled this pic-

turesque area of southern China.

The open-air eatery looks out on

the black sands of Hác-Sá beach,

where cool breezes help stem

the area’s natural humidity. The

aroma of barbecued beef, roasted

suckling pigs and freshly cooked

seafood wash over the restaurant.

Customers partake in a tradi-

tional Portuguese menu, in which

Chinese enclave of Macau booms

with Las Vegas-style casinos,

changing its character, future

A couple watches the light and water show on the man-made lake at the entrance

to Wynn Macau, located in the downtown region on the Macau Peninsula.

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 5 of 576

the entrees are paired with freshly

grown vegetables and meals are

enjoyed with bottles of chilled vin-

ho verde, Portuguese green wine.

Credit cards are not accepted. The

restaurant is cash-only.

Reggie Martin, a native of East

Chicago, Ind., has lived in China

for almost five years. Martin, the

senior manager of special events

and sports for The Venetian

Macau, grew quite familiar with

Restaurante Fernando during his

time as general manager of the

nearby Westin resort in Coloane.

He still eats there at least once a

week.

Hong Kong residents, Martin said,

will often make the hour-long trip to

Macau across the South China Sea

by the high-speed hydrofoil ferry just

to dine at Restaurante Fernando.

In contrast, the massive $2.4

billion Venetian Macau, with 3,000

hotel rooms, sits about 10 minutes

from Restaurante Fernando on the

The Venetian Macau’s man-made lake reflects the high-rise apartment buildings on

Taipa Island. The hotel is located on the Cotai Strip.

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 6 of 576

fast-developing Cotai Strip, where

an estimated 20,000 rooms housed

in more than a dozen hotel-casi-

nos are under construction. The

Venetian has its own Portuguese

restaurant, with about 30 other

dining establishments.

Still, Martin believes The Ve-

netian, which has been averaging

between 40,000 and 60,000 visitors a

day since its Aug. 28 opening, will not

harm Restaurante Fernando. In fact,

the new resort might mean a few

more customers for the restaurant.

“It will never change, no matter

what happens around it,” Martin

said.

While Restaurante Fernando

might survive competition, change

is something the 510,000 residents

of Macau will be facing through

the end of decade and possibly

beyond.

‘IT WAS A VERY SCARY, SCARY PLACE’

Macau — which includes the

urbanized Macau Peninsula, the

islands of Taipa and Coloane,

and the Cotai Strip, an area of

reclaimed land between the two

islands — is in the cross hairs of a

multibillion-dollar building boom

largely fueled by Nevada’s major

gaming companies, which are

exporting Las Vegas-style casinos

into a market starving for action.

In 2002, Macau’s government,

which operates separately from the

People’s Republic of China as a spe-

cial administrative region, opened

the way for casino expansion.

At the time, Macau had 11

decaying gambling halls under the

direction of one operator, a con-

sortium headed by controversial

Hong Kong billionaire Stanley Ho,

now 86 years old and the chairman

of Shun Tak Holdings Ltd. It is one

of the largest publicly traded com-

panies on the Hong Kong Stock

Exchange, with interests in real

estate, transportation, hospitality

and gaming.

For years, U.S. and interna-

tional law enforcement authorities

have thought Chinese organized

crime triads secretly controlled

the casinos operated by Ho, much

in the same manner Nevada’s

gambling industry was controlled

by organized crime syndicates in

the 1960s and 1970s.

A decade ago, Macau did not

have a hospitable environment.

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 7 of 576

MIKE JOHNSON/REVIEW-JOURNAL

1. Grand Lisboa

2. Lisboa

3. MGM Grand Macau

4. Wynn Macau

5. StarWorld

6. Sands Macau

7. Crown Macau

8. Venetian Macau

Macau

Peninsula

Taipa

Coloane

Zhuhai

(Henqin Island)

Bay of

Pak On

Macau

International

Airport

Macau

Ferry

Terminal

New

ferry

terminal

University

of Macau

St. Paul’s

Ruins

Logistic

center

Lotus

Bridge

University

Westin Resort

Hac Sa Beach

Race course

Sports

grounds

Macau

Dome

Macau

Tower

Sai Wan Bridge

A-Ma

Temple

Immigration

Guia Hill

Macau-Tapai Bridge

Friendship Bridge

Cotai Strip

MACAU

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 8 of 576

Mark Brown, president of the two

Las Vegas Sands Corp. casinos in

Macau, first visited the city in 1993

when he was handling international

marketing for Caesars Entertainment.

He didn’t think he would ever return.

“It wasn’t much, and it was a

very scary, scary place,” Brown

recalled. “The casinos were very

dingy and very smoky.”

But like Las Vegas, which rid it-

self of its mob image when corporate

America invaded the Strip, Gaming

Inc. has transformed Macau.

At the end of 2006, there were

26 casinos, including glittering

Las Vegas-style resorts operated

by Las Vegas Sands and Wynn Re-

sorts Ltd. Three new hotel-casinos

have opened this year, including

the Sands-owned Venetian, which

has a 546,000-square-foot casino,

the largest single gambling hall in

the world, and 10.5 million square

feet of public space.

A fourth resort, the $1.1 bil-

lion MGM Grand Macau — which

is a 50-50 joint venture between

MGM Mirage and Pansy Ho, the

daughter of Stanley Ho — will be

unveiled by year’s end.

“The Macau market is really dif-

ferent from the Las Vegas market,”

said MGM Mirage International

CEO Bob Moon, who is overseeing

development of the MGM Grand

Macau.

“Las Vegas is a destination resort,

and that’s what Macau wants to be.”

GAMING REVENUES SOAR

Walter Power, senior vice presi-

dent of operations for Las Vegas

Sands’ two Macau casinos, was

one of the gaming company’s first

employees on the ground in China.

GAMING REVENUES —

MACAU AND THE STRIP

in billions of U.S. dollars

YEAR MACAU STRIP

2000 $1,985 $4,803

2001 $2,247 $4,702

2002 $2,673 $4,654

2003 $3,472 $4,760

2004 $5,023 $5,334

2005 $5,591 $6,033

2006 $6,708 $6,688

2007

Estimated $9,700 Not available

(Macau gaming revenues are already

up 47 percent year to date)

2008 Projected $12,000 Not available

2009 Projected $14,000 Not available

Source: Deutsche Nank, Nevada Gaming Control

Board, Macau Special Administrative Region–

Gaming Inspection and Coordination Bureau

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 9 of 576

His initial goal was to investigate

what the competition was offering.

“Four and a half years ago,

Macau was a very hard-core inten-

sive gambling experience,” Power

said. “It was a monopoly. There

was a lack of competition, and the

offerings were pretty bare.”

One of the first places Power

visited was the Ho-operated Lis-

boa, a dark and smoky gambling

parlor with low ceilings, a no-frills

personality and a male-dominated

customer base playing baccarat,

the overwhelming game of choice

among Asian gamblers. Lisboa

casino bosses immediately spotted

him and his fellow Sands executives.

“They knew what we were

doing, and they certainly didn’t

make us feel welcome,” Power

said. “But this was a way for us to

determine what the market was

like. It was a testosterone-driven,

Lights from the Lisboa, one of the original gambling halls in the Chinese enclave of

Macau, reflect off the man-made lake in front of Wynn Macau.

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 10 of 576

male-dominated gambling hall. It

had slot machines, but there were

no seats around the slots.”

Not much has changed at the

Lisboa in the past five years.

Asian prostitutes still circle a

rundown retail area in the hotel’s

lower levels under the watchful

eyes of their pimps, who sit in

the promenade’s noodle bar, and

hotel security guards, one of whom

admonished a Review-Journal

photographer for secretly trying to

take pictures of the working girls.

What has changed are the total

gaming revenues coming from

Macau. In 2002, Ho’s casinos won

$2.67 billion from customers. At

the end of 2006, gaming revenues

in Macau topped more than $6.7

billion, surpassing the total reve-

nues earned last year by Las Vegas’

lucrative casinos on the Strip by

about $20 million. Through August,

Macau’s gaming revenues were up

47 percent from a year ago.

Gaming analysts predict the

gap between Macau and the Strip

will widen. They estimate Macau

casinos could produce annual

gambling revenues of more than

$14 billion by 2009.

On those revenues, casino op-

erators pay a 39 percent tax to the

Macau government.

Baccarat accounts for roughly

80 percent of all table games.

“We have one craps table at

The Venetian,” Brown said of the

casino, which has 870 table games.

“Good luck if you can find it.”

Mark Brown

Las Vegas Sands

Corp. official runs

two casinos in

Macau but in 1993

saw little to like

Walter Power

Las Vegas Sands

Corp. official scouted

the “hard-core”

gaming environment

Bill Lerner

Gaming analyst

says companies

are getting higher

returns on their

Macau investments

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 11 of 576

COMPANIES COMMIT BILLIONS

Las Vegas gaming companies

have invested substantially in

Macau. Las Vegas Sands spent

$265 million on the Sands Macau

in 2004 and since has put another

$100 million into the property. In

addition to the $2.4 billion for The

Venetian, the company is spending

more than $12 billion to build 11

resorts on the Cotai Strip. Wynn

Resorts’ total investment is more

than $1.1 billion in the 600-room

Wynn Macau, and the company ex-

pects to spend $600 million to add

a second hotel tower by 2009.

Deutsche Bank gaming analyst

Bill Lerner, who has visited Macau

several times in the past year, said

gaming companies stretch their

construction costs because labor

and materials are cheaper than in

The under-construction Grand Lisboa, left, Wynn Macau and the MGM Grand

Macau, which is scheduled to open later this year, are viewed across the

harbor from the Crown Macau on Taipa Island.

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 12 of 576

the United States.

“Development is less expensive,

but it doesn’t mean they are not

spending billions of dollars,” Lern-

er said while sitting at an outdoor

cafe at Wynn Macau. “They are get-

ting more for the money by doing

it here. Because this is a limited-

license environment, it leads to

higher returns on investment, and

there is evidence of that.”

Las Vegas Sands officials said

they recovered their investment

on the Sands Macau in less than

a year. Lerner said Wynn Resorts

was getting about a 30 percent

return on its investment in Wynn

Macau. But when factoring in the

$900 million payment the company

received from Australian casino

operator Publishing and Broad-

casting Ltd. for its lucrative casino

sub-concession, the return is more

than 100 percent.

“It’s so much different than you

see in Las Vegas,” Lerner said.

The number of hotel rooms in

Macau — about 800 in 2004 — is

expected to hit 8,900 by the end

of this year. The Venetian alone

brought 3,000 hotel rooms to the

market.

MACAU CASINO STATISTICS

GAMING TABLES

2002 339

2003 424

2004 1,092

2005 1,388

2006 2,762

2007 *3,952

Projected by 2010 9,520

SLOTMACHINES

2002 808

2003 814

2004 2,254

2005 3,421

2006 6,546

2007 *12,334

Projected by 2010 31,156

HOTEL ROOMS

2004 795

2005 1,664

2006 4,251

2007 *8,901

Projected by 2010 31,017

*Includes Venetian Macau and MGM Grand Macau

Sources: Macau Special Administrative Region

– Gaming Inspection and Coordination Bureau;

Deutsche Bank

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 13 of 576

The growth is an effort to

change visitation in Macau, from

that of a 24-hour day-trip market,

to one where customers are will-

ing to spend three or four days

staying in luxury hotels, gambling,

eating in fine restaurants, shop-

ping in upscale retail malls and

viewing shows, actions that would

replicate those of the typical Las

Vegas tourist.

The Venetian’s Grand Canal

Shoppes covers more than 1 mil-

lion square feet and eventually

will house 300 retailers. Wynn

houses about a dozen upscale re-

tail tenants, and the MGM Grand

will benefit from One Central, a

retail, dining and entertainment

project being built next to the

resort by the company’s joint-

venture partner, Pansy Ho.

The Venetian will unveil a

Cirque du Soleil show in the

spring, and Wynn is building a the-

ater for a yet-to-be named show.

“Compared to The Venetian,

we’re a boutique operator now,”

said Ian Michael Coughlin,

president of Wynn Macau, which

opened a year ago and is in various

stages of three expansion plans.

“We do see the destination

traveler as a growing part of our

business,” Coughlin said. “Macau

has been a strong day-tripper’s

market, but that’s been Macau’s

history. We’re seeing a significant

increase in the destination travel

market, which is good. No one

wants to be one-dimensional.”

Brown said the early days of

The Venetian have been consistent

with Macau’s history. Most of the

Visitors pose for photos Sept. 11 in the

St. Marks Square area of the Grand

Canal Shoppes at The Venetian Macau.

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 14 of 576

guests are staying just one night.

He believes the figure will change

over time.

“It reminds me a little bit of

the Atlantic City market,” said

Brown, who ran Donald Trump’s

casinos on the Boardwalk before

joining Las Vegas Sands. “Because

we have so much to offer (at The

Venetian), we think our customer

will want to stay longer.”

A record 22 million visitors

came to Macau in 2006, 86 percent

of whom traveled from mainland

China and Hong Kong. This year,

Macau tourism officials expect the

number of visitors to increase to

25 million.

In the neighboring mainland

Chinese jurisdictions that surround

Macau, such as Guangzhou, Zhong-

shan, Jiangmen and Foshan, the

Diners enjoy lunch at the 1,000-seat food court in The Venetian Macau’s Grand

Canal Shoppes.

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 15 of 576

Chinese government

estimates 314 million

residents are eligible

to travel. Las Vegas

Sands executives

like to point out that

3 billion people are

within a five-hour

plane flight to Macau.

While China is still

a communist nation,

business develop-

ment has created an

expanding middle- to

upper-middle class of

citizens with dispos-

able income. Casino

gambling is one ve-

hicle for that spending opportunity.

“People are coming to discover

Macau as almost their first step

out of their country, and it’s an

easy step for people,” Coughlin

said. “We’re seeing new players

coming all the time, and we’ve

become the venue of choice. We

have about 22,000 people a day

come here. We compete with other

casinos, but we have carved out

a niche for ourselves. We’re not

about scale and volume right now.

We are about luxury and quality.”

LAS VEGAS MODEL TRANSLATES WELL

The Gaming Asia Pacific Sum-

mit, held in September at the

Macau Tower and Convention

Center, carried two days of dis-

cussions on the growth of gaming

throughout the region.

Jonathan Galaviz, a partner

in Las Vegas-based Globalysis,

a research and consulting firm

that advises companies in several

travel-related industries on the

Asian market, led several discus-

sions during the summit. Galaviz,

Jonathan Galaviz, a partner in Las Vegas-based

Globalysis, which advises companies about business

in Asia, reflects on a question Sept. 11 at the Macau

Tower Convention Center.

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 16 of 576

who has traveled extensively in

Asia, said Macau is capitalizing on

the booming Chinese economy.

“Productive workers are reap-

ing the benefits of the wealth they

have generated, and now they

want to be able to spend it some-

where to have entertainment,”

Galaviz said. “What’s interesting

is that the Las Vegas model of

tourism development, which uses

casino gaming as a fundamental

driver of economic growth, is at

play here in Asia. This is why Las

Vegas companies are so successful

in the region.”

Galaviz said Nevada casino op-

erators are able to transfer their

experience to the Chinese market.

“Las Vegas knows how to do it

and do it right,” Galaviz said. “They

understand regulation and the

competitive dynamics, where new

entrants into the marketplace ac-

The Wynn Macau employees await customers at the Macau Ferry Terminal.

High-speed ferries shuttle casino customers between Macau and Hong Kong.

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 17 of 576

tually refresh the marketplace and

benefit all the players. It’s like you

see on the Las Vegas Strip, where

one new property ends up benefit-

ing all the players.”

Macau has one gambling aspect

that defines the market as dif-

ferent from the one in Las Vegas:

high-end play inside luxurious

private gaming salons, tucked away

from the main casino floor, which is

dominated by mass-market players.

The Venetian, Sands, Wynn and

the soon-to-open MGM Grand,

house elaborate private gambling

areas with features similar to

private country clubs.

At The Venetian, guests check-

ing into the Paiza Club never have

to venture into the main casino,

unless they want to visit the Grand

Canal Shoppes. Wynn has private

salons on the hotel’s upper floors.

The Crown Macau on Taipa oper-

ates its private gaming salons on

the hotel’s 37th floor, offering

views of the Macau Peninsula.

Crown Macau CEO Greg Hawkins

said a high-end customer is required

to put up $30 million in Hong Kong

dollars — about $3.9 million in U.S.

currency — for gambling purposes

to gain access to the private salon.

“We’re looking for the top of

the VIP market, as is our competi-

tion,” Hawkins said.

The reliance on high-end play

shows in a percentage breakdown

of Macau gaming revenues. Of the

$6.7 billion won by Macau casinos

last year, roughly 70 percent came

from the VIP customer base, a

figure that stands out to Nevada

gaming officials.

“We look at Macau and see the

casino floor fairly busy, but the

story is what’s happening in the

private rooms,” said Gaming Con-

trol Board member Mark Clayton,

who spoke at the summit. “It’s al-

most opposite of Las Vegas, where

most of the action is up front. We

see minimal business in the back of

the (Strip’s) private gaming areas.”

Gaming analysts and Macau

casino leaders think the mass

market will cut into VIP percent-

age as more casinos are added

to the mix. Brown said his two

casinos have seen an influx in

mass-market customers since The

Venetian’s opening.

“We have gamblers on the floor

who wager $5,000 to $10,000 a hand

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 18 of 576

with us,” Brown said. “That same

guy in Las Vegas is in the baccarat

pit with 12 pit bosses standing

around and staring at him.”

Another difference between

casinos in Macau and Las Vegas

is that photography inside Macau

casinos is prohibited by the Macau

government because of privacy

issues for the customers.

Media outlets can petition the

government for permission, but

Venetian Macau spokesman Buddy

Lam said the paperwork can take

up to two weeks or longer.

‘NOT A MARKET FOR AMERICANS’

Macau, despite its rapid growth,

is not competition for Las Vegas. The

markets are completely different.

Security personnel near the Casino Lisboa watch as a pedicab shuttles a

customer to the Grand Lisboa across the street. Both casinos are owned by

Hong Kong billionaire Stanley Ho.

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 19 of 576

Southeast Asia — about 14 hours

travel time by airplane from Los

Angeles to Hong Kong — is too far

to travel for Americans interested in

a gaming vacation. Those consum-

ers have Las Vegas at their disposal,

gaming industry insiders said.

“This is not a market for Ameri-

cans,” Power said. “The market

here is growing, but it’s Asians that

are transforming this market.”

Clayton said Nevada regulators

are not concerned that Macau is

slicing into Silver State gaming

revenues.

“The operators I’ve spoken with

tell me the market is the People’s

Republic of China,” Clayton said.

“It’s a complement to the Las Vegas

experience and furthers a person’s

desire to visit Las Vegas. The prof-

its made by our Las Vegas licensees

in Macau may lead to further devel-

opment in the state of Nevada.”

Galaviz believes Macau offers

Las Vegas the opportunity for even

greater riches. Southern Nevada

could be the center of the core

innovations for casino gaming

and entertainment, he said, much

like New York City is for financial

markets.

“The industry will go into other

emerging markets over the next 10

to 20 years,” Galaviz said. “As in-

novation takes place globally, most

of the intellectual property devel-

opment and the new, creative ideas

will be coming from Las Vegas.”

MODERN MINGLES WITH ANCIENT

The under-construction Grand

Lisboa hotel tower, designed in

the shape of a lotus flower, rises

high above the Macau skyline.

About 20 minutes away by foot,

the Ruins of St. Paul’s sit on a

hill above the city, a short walk-

ing distance from Senado Square,

Macau’s centuries-old, Portu-

guese-themed urban center.

Senado Square is paved with a

wave-pattern mosaic tile. The Ru-

ins of St. Paul’s is a two-level stone

facade, which is all that remains of

the area’s first Jesuit church.

The structure, built in the early

17th century, was destroyed by a

fire in 1835.

The blended images of the

history and the future symbolize

Macau, where museums and his-

torical landmarks mix with shim-

mering gambling halls.

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 20 of 576

The A-Ma Temple, a shrine that

existed before Macau was even

developed, still welcomes a repre-

sentation of all Chinese cultures:

Confucianism, Taoism and Bud-

dhism.

The casino cluster that in-

cludes the Lisboa, Wynn, Star-

World and MGM Grand is just a

10-minute walk away.

“There is strong central cul-

ture, with an old colonial Portu-

guese influence here,” Coughlin

said. “As much the casino indus-

try grows, that’s something that

will always be part of Macau.”

A couple check out their digital photos at the Ruins of St. Paul’s, the remnants

of a 17th-century church on a hilltop above Macau. Mixed with the Portuguese

architecture is the under-construction Grand Lisboa hotel, which will be the

tallest building in Macau.

4 A LOOK AT THE KEY PLAYERS

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 21 of 576

aming has been part of

Macau since 1937, when

two Chinese citizens

converted the city’s Central Hotel

into a casino. The pair held the

monopoly until 1962, when con-

troversial Chinese businessman

Stanley Ho and his partners won

Macau’s exclusive gaming license,

which they held until 2002.

Once a monopoly, Macau’s gaming

scene has several players now

The Lisboa, built in 1970 and expanded in 1991, stands in contrast to the

Wynn Macau, which opened a year ago, and the MGM Grand Macau, far right,

scheduled to open later this year.

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 22 of 576

Law enforcement has alleged

Chinese organized crime triads

influenced Ho’s casinos.

The Portuguese colonized Macau

in the 16th century as the first Eu-

ropean settlement in the Far East.

In 1987, China and Portugal

signed an agreement to create

the Macau Special Administra-

tive Region and return the area to

Chinese rule by December 1999.

China’s government promised

Macau would not fall under the

country’s communist economic

system and would be autonomous

in all matters except foreign af-

fairs and defense.

Macau’s government soon

established the Casino Conces-

sions Committee to select three

new concessionaires with final

approval given to the Macau SAR’s

chief executive, Edmund Ho (no

relation to Stanley Ho).

In March 2002, the concessions

were awarded to Stanley Ho, a

partnership between Galaxy En-

tertainment and Las Vegas Sands

Corp., and Wynn Resorts Ltd.

The three concession holders

were allowed to each award a

single sub-concession.

SJM — STANLEY HO

The 86-year-old Hong Kong bil-

lionaire, who is the executive chair-

man of Hong Kong-based Shun Tak

Holdings Ltd., headed the original

consortium of casino investors. The

group, known as Sociedade de Tur-

ismo e Diversoes, held the casino

monopoly for 39 years.

The original Lisboa was built

in 1970 with its 12-story rounded

hotel tower that resembles the old

Sands Las Vegas. The

smoky, aging casino

continues to operate

with 146 table games

and 107 slot machines.

The Lisboa hotel was expanded in

1991 to a total of 927 rooms.

SJM opened the neighboring

Grand Lisboa, a $375 million ca-

sino, in February with 240 gam-

ing tables and 480 slot machines.

A 500-room hotel tower, being

constructed in the shape of a giant

lotus flower, is expected to open in

February.

Including the Lisboa properties,

SJM operates a total of 18 casinos

in Macau, including the Babylon

Casino on Fisherman’s Wharf,

Greek Mythology on Taipa Island,

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 23 of 576

Grand Emperor, Golden Dragon

and the Fortuna.

SJM also has several land par-

cels in Macau for future casino de-

velopment, including the Shun Tak

Nam Van site. It is adjacent to the

Macau Tower, a Stratosphere-like

observation tower, retail center

and convention location.

GALAxY ENTERTAINMENT GROUP

A Hong Kong-based company

that originally bid on the Macau

casino market with Las Vegas

Sands Corp., Galaxy operates five

casinos in Macau, including the

President and the Grand Waldo on

the peninsula.

In October 2006,

Galaxy opened the

$325 million Star

World Hotel and

Casino, a 34-story,

500-room hotel that features a

casino with 500 slot machines and

211 table games.

Galaxy is building the Mega Re-

sort near the Sai Wan Bridge, one

of three arteries that connects the

Macau Peninsula with Taipa Island

and the Cotai Strip. Scheduled

to open late next year, the Mega

Resort is expected to include 2,500

hotel rooms in two towers and a

casino with more than 300 table

games and 1,000 slot machines.

LAS VEGAS SANDS CORP.

The first American

casino operator to

enter Macau, Las

Vegas Sands split with

Galaxy and took control

of the sub-concession. The com-

pany opened the $265 million

Sands Macau in May 2004 with 300

gaming tables and 666 slot ma-

chines near the Macau waterfront.

Within a year, the casino was paid

off through cash flow.

The Sands Macau casino was

expanded this year to include

more than a 1,000 slot machines

and more than 650 table games. A

new 289-room hotel tower opened

in September to complement the

casino’s original 51 rooms.

In the meantime, Las Vegas

Sands has moved to become

Macau’s dominant casino operator.

In August, the company opened

the $2.4 billion Venetian Macau on

the Cotai Strip. With 3,000 hotel

rooms and suites, The Venetian

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 24 of 576

almost doubled the hotel offerings

in Macau. The 546,000-square-foot

casino, with 4,100 slot machines

and 870 table games, is easily the

world’s largest gambling hall. The

Venetian also includes

1 million square feet

of retail space, 1.2

million square feet

of convention space,

and 15,000-seat sports arena.

Las Vegas Sands is not done

building on the Cotai Strip. The

company is developing five other

casino sites on Cotai, with plans

to spend more than $12 billion to

build 11 hotel-casinos with almost

20,000 rooms. The hotels will

include some of the world’s most

well-known brands and will open

in phases through 2009.

The first of the new Cotai resorts,

a 1,000-room Four Seasons Hotel,

will open in February. Las Vegas

Sands will operate the casinos at

each of the Cotai hotel properties.

WYNN RESORTS LTD.

The $700 million Wynn Macau

opened in September 2006 and

immediately set out on an expan-

sion plan.

The 600-room resort, which is a

scaled-down version of Wynn Las

Vegas, opened with 220 table games

and 365 slot machines. A $450 mil-

lion expansion to the casino, which

added 25 table games and 200 slot

machines, opened in September.

Another casino expansion, adding

25 table games and 545 slot ma-

chines, is scheduled for

completion in January.

A second hotel

tower, the $600 million

Wynn Macau Diamond

Suites with 400 rooms, is expected

to open by 2009.

Wynn also has secured a 52-acre

site on the Cotai Strip where the

company is formulating plans to

develop up to three hotel-casinos.

MELCO PBL GAMING

A joint venture between Aus-

tralia’s Publishing and Broadcast-

ing Ltd. and Lawrence Ho, son

of Stanley Ho, is targeting four

casino locations in Macau on four

different sites.

The partnership purchased a

casino sub-concession from Wynn

Resorts for $900 million last year.

The company’s first casino is

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 25 of 576

the $585 million Crown Macau, on

Taipa Island, which opened in May.

The 216-room upscale resort has

a multilevel casino with 220 table

games and 500 slot machines.

Melco PBL is spending more

than $2.8 billion to develop the

City of Dreams site across the

street from The Venetian on the

Cotai Strip. Expected to open in

2009, City of Dreams reportedly

has shunned the idea of an un-

derwater casino, but still plans a

420,000-square-foot gaming space

with 450 tables and 3,000 slot

machines. The site is expected to

have multiple hotels totaling more

than 1,700 rooms, including a

Hard Rock and Grand Hyatt.

Melco PBL also is listed as the

gaming partner in Macau Studio

City, a multihotel and entertain-

ment project being developed

just down the road from City of

Dreams on the Cotai Strip.

Melco PBL controls a poten-

tial casino location on the Macau

Peninsula that is near the Sands

Macau where the company plans to

open a resort by 2010. Melco PBL

also operates the Mocha Clubs, a

chain of Macau slot parlors.

MGM MIRAGE/PANSY HO

SJM sold its sub-concession in

2004 to a 50-50 joint venture between

MGM Mirage and Pansy Ho, Stanley

Ho’s daughter. MGM Mirage paid

$200 million cash and agreed to

share 50 percent of all future earn-

ings from the venture with Pansy Ho.

The $1.1 billion MGM Grand

Macau is expected to open by De-

cember with 800 slot machines and

380 table games. The unusual hotel

tower — three different levels

marked by three different shades

of gold glass — will have 600 rooms

and suites and a glass-enclosed

atrium, twice the size of the con-

servatory at Bellagio. Separately,

Pansy Ho is heading a partnership

that is building a nongaming hotel,

retail and entertainment complex

adjacent to the MGM Grand Macau.

The MGM Mirage-Pansy Ho part-

nership recently announced plans

to pursue a site on the Cotai Strip

for further gaming development.

OTHER POTENTIAL DEVELOPMENTS

Speculation centers on 2009,

when Edmund Ho leaves office.

Some analysts believe additional ca-

sino concessions might be awarded.

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 26 of 576

Meanwhile, a consortium of

U.S. and Chinese developers is

spending more than $1.7 billion on

Macau Studio City, a development

on the Cotai Strip that will include

theater, television and film pro-

duction studios, four hotels total-

ing 1,900 rooms, retail shops and a

casino large enough for 400 table

games and 1,000 slot machines.

Melco PBL will operate the casino.

Former Las Vegas Sands gaming

executive David Friedman is part

of the development team on Studio

City, which is under construction

and scheduled to open in 2009.

Harrah’s Entertainment entered

the Macau picture last month when

the casino operator purchased the

175-acre, 18-hole, Macau Orient

Golf Course, just behind Studio City

on the Cotai Strip.

The site is near the Lotus Bridge,

one of two border crossings from

mainland China into Macau. The

company, which does not have a

gaming concession, said it plans to

operate the golf course for now.

Arriving visitors pass through the Macau Ferry Terminal on the way to shuttle

buses, cabs or private town cars that are headed to one of the Chinese

enclave’s growing number of hotel-casinos.

4 A TRANSPORTATION CHALLENGE

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 27 of 576

he booming casino industry

is taxing Macau’s infra-

structure. How to move

potential customers from the pen-

insula to the Cotai Strip and back

concerns gaming operators.

“Getting people to Macau is

not a problem,” said MGM Mirage

International CEO Bob Moon. “It’s

getting them around once they are

here that is the issue.”

Macau has about 750 taxicabs,

and the hotel-casinos operate

their own fleets of private cars.

Still, with new hotel-casino con-

struction planned through the end

of the decade, Macau’s infrastruc-

ture is being stretched.

With rising number of visitors comes problem

of keeping up with transportation needs

Visitors disembark from a shuttle bus at the Sands Macau after a short trip from

the Macau Ferry Terminal.

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 28 of 576

“This is a city of 500,000 people,

and the development here in the

last five-to-seven years has been

remarkable,” said

Wynn Macau Presi-

dent Ian Michael

Coughlin. “The

level of infrastruc-

ture development

that everybody

would like to hap-

pen automatically

doesn’t in any city

of the world.”

Typically, visitors to Macau ar-

rive one of two ways.

From mainland China, casino

tour buses transport customers

from one of two

border-gate cross-

ings.

Most visitors

travel for an hour

from Hong Kong

by high-speed hy-

drofoil ferry boats.

The ferries and

the ferry terminal

are operated by

Chinese billionaire Stanley Ho’s

Shun Tak Holdings. Ho operates 18

Macau casinos.

Las Vegas Sands Corp. built

a second ferry terminal, which

opened last week on Taipa near the

under-used Macau International

Airport. The company will operate

almost two dozen ferries that will

run between the terminal and Hong

Kong. Sands operates two Macau

casinos and is building 11 resorts

on the developing Cotai Strip.

“There is no question that

infrastructure is a concern,” said

Mark Brown, president of the

Sands Macau and Venetian Macau.

“That’s why we’re doing a lot of

things on our own. All the things

that are being brought up and

talked about help everyone.”

Other infrastructure projects

are on the horizon:

• A light rail system that would

connect the Macau Ferry Termi-

nal with the area housing Wynn

Macau, Lisboa, StarWorld and the

MGM Grand Macau, could be in

place by 2009.

• A foot tunnel between Macau

and the mainland China region of

Zhuhai is pending government ap-

proval but has a target date of 2010.

• The most ambitious project

on the charts is an 18-mile bridge

Bob Moon

MGM Mirage

International

Ian Michael

Coughlin

Wynn Macau

3PART 1 of 54 SHOW ARTICLE INDEX

5PAGE 29 of 576

across the South China

Sea that would connect

Hong Kong with Macau

and Zhuhai.

The bridge has a pos-

sible completion date of

2011, and it would allow

travelers to take a 30-min-

ute trip by car between

Hong Kong and Macau.

“Certainly, there is a

lot more to come, such as

making better use of the

Macau airport with flights

from various parts of Asia

and China,” said Deutsche

Bank gaming analyst Bill Lerner.

Crown Macau CEO Greg Hawk-

ins said that resolving the infra-

structure issue is the most critical

matter facing Macau.

“The demands on Cotai alone

are a particular concern,” Hawkins

said. “We’re adding about 150,000

customers a day on top of the cur-

rent requirement. There are issues

when you think about moving that

number of people through the cur-

rent infrastructure mechanism.”

Coughlin is confident infra-

structure issues will be resolved.

“I believe (infrastructure) is

keeping as much a pace as pos-

sible,” Coughlin said. “There are

challenges and, in fairness to the

authorities, they are looking to

engage with business. We want to

be part of the solution.”

Moon said the good news is that

the Macau government realizes

the issues.

“When people get here, the in-

frastructure to get people around

will be lagging behind the develop-

ment for a couple of years,” Moon

said. “I think the government is

doing all they can to help, but it’s

rapid growth.”

A mainland Chinese resident heads back to the

border crossing between Macau and mainland

China aboard a Wynn Macau shuttle bus.

3PART 2 of 54 SHOW ARTICLE INDEX

5PAGE 30 of 576

hen Wendy Yu went

home and told her

mother she was going

to oversee human resources for

a casino company, panic set in.

What if her daughter had to fire

someone? Would her daughter’s

arms be cut off by angry bosses?

More than a dozen

hotel-casinos under

construction will mean

jobs to ﬁll in Macau

A g i a n t ‘ H e l p w a n t e d ’ w i n d o w

MGM Grand Macau workers get a lesson in repairing a card-shuffling device

at the company training center in Macau. MGM Mirage converted an old

theater into a full-fledged casino operations school.

3PART 2 of 54 SHOW ARTICLE INDEX

5PAGE 31 of 576

Why would her daughter, with

more than a dozen years experi-

ence in employee management,

leave a comfortable position as

the director of human resources

for the Westin Resort on Coloane

for a job in gaming?

Yu, vice president of human

resources for the Wynn Macau,

laughs when recalling the story.

Her mother, a native of Macau,

was focused on the old days of

gaming. Casinos, operated by Hong

Kong billionaire Stanley Ho, were

reportedly influenced by Chinese

organized crime triads.

Today, gaming has taken on a

Las Vegas feel in Macau. Large

hotel-casinos operated by Nevada-

based companies have provided

jobs for thousands of workers

since 2004, all but eliminating un-

employment in Macau. Meanwhile,

casino workers have garnered ben-

efits similar to their counterparts

in Las Vegas.

Figures provided by the Macau

Department of Statistics and Cen-

sus Service show that at the end of

2006 Macau’s 24 casinos employed

36,412 employees, 39.4 percent

more than in 2005.

Meanwhile, the 216-room Crown

Macau, operated by Melco PBL,

opened in May with 4,000 employ-

ees. Las Vegas Sands Corp. opened

the 3,000-room Venetian Macau

on Aug. 28 with 12,000 workers.

MGM Mirage is expected to open

the 600-room MGM Grand Macau

by the end of the year with about

6,000 employees.

Through July, unemployment in

Macau, a city of 510,000, was 3.1

percent. The department estimat-

ed the total labor force at 310,700,

with 301,200 employed.

Yu said potential casino em-

ployees are attracted by the

reputation of American casino

companies. Job applicants at

Wynn Macau, which opened in

September 2006, were attracted by

the celebrity of Wynn Resorts Ltd.

Chairman Steve Wynn.

“People saw the difference be-

tween an American company and a

local company,” said Yu, who spent

three years before the opening

of Wynn Macau putting employee

programs and hiring schedules

into place in order to bring aboard

roughly 6,000 workers for the

casino’s opening a year ago.

3PART 2 of 54 SHOW ARTICLE INDEX

5PAGE 32 of 576

“Mr. Wynn gave us the resources

we needed because we had a chal-

lenge in filling certain jobs in this

market that people prefer not to

do,” Yu said. “Employees have a lot

of different choices.”

Casino executives acknowledge

that gaming industry jobs have

made it tougher for smaller busi-

nesses in Macau to retain employ-

ees. The competition for workers

is also fierce because of the rela-

tively small labor pool and rules

that govern certain job duties.

All casino dealers in Macau, for

example, must be Macau resi-

dents. But with the minimum gam-

bling age being 18, dealers can be

A Wynn Macau employee arrives Sept. 12 at the hotel, which provides moped

parking for its workers. Casino employees in the Chinese enclave get benefits

similar to their counterparts in Las Vegas.

3PART 2 of 54 SHOW ARTICLE INDEX

5PAGE 33 of 576

as young as 18. Residents of neigh-

boring communities in mainland

China hired at the resorts cannot

work in the casino areas.

“We have two restaurants in the

middle of our casino floor,” Vene-

tian Macau President Mark Brown

said. “People from mainland China

cannot work in those restaurants.”

The job market is expected to

get even tighter through the end

of the decade. More than a dozen

hotel-casinos are under construc-

tion along Macau’s Cotai Strip.

Estimates show resorts already

under construction could more

than double Macau’s current gam-

ing industry work force. Las Vegas

Sands Corp. will operate the bulk

of the hotel-casinos on Cotai.

“Is the labor pool large enough

now? Yes,” Brown said. “Moving

forward? No. That’s not going to go

away.”

David Friedman, co-CEO of the

under-construction Macau Studio

City on the Cotai Strip, said he

expects his concerns about hiring

an expected 7,000 workers to ease.

“The Macau government seems

to be working hard to plan ahead,”

Friedman said. “Everyone knows

there’s going to be a demand for a

much larger labor force, and it’s a

focus of the operators as well. I’m

comfortable that by 2009, much

of these issues will be resolved

and that we’ll have a much more

mature labor market.”

Several casino operators are

already planning for the future.

The MGM Grand Macau, which

will open by the end of the year, has

already hired most of its work force.

To train casino employees, MGM

Mirage purchased an old theater in

a Macau residential area and turned

the building into a makeshift casino

with gaming tables, a cashiers

cage, count room, surveillance and

a training area for slot machine

technicians. Classes run around the

clock, just like a gaming operation.

MGM Mirage International CEO

Bob Moon said Macau has few

training options for dealers, so the

company set up its own teaching

program.

“This is a realistic as you can

be,” said Moon, touring the loca-

tion where prospective casino em-

ployees were as active as any busy

night on a gaming floor. “When we

go live, our casino staff will have

3PART 2 of 54 SHOW ARTICLE INDEX

5PAGE 34 of 576

had countless hours of training

and will be ready.”

Moon said MGM Mirage has had

little trouble filling its jobs at the

MGM Grand.

Yu said Wynn Macau lost just

a handful of employees when The

Venetian Macau filled its large

work force.

Sands Macau executives put

steps in place to ensure that quali-

fied employees would staff both

The Venetian and Sands.

Many dealers at the Sands were

promoted to shift managers and

new dealers were brought in.

While the government requires

dealers to be Macau residents,

a large percentage of the casino

supervisors at the Sands and

Venetian are also locals. The

process allowed the company to

put experienced and novice casino

employees at both locations.

“We had one of the largest

dealer-training sites in the history

of the gaming industry,” Sands

Macau Senior Vice President of

GM Mirage International CEO Bob Moon passes a large photo in the resort’s

employment center. MGM Mirage plans to hire 6,000 workers for the $1.1 billion

MGM Grand Macau.

3PART 2 of 54 SHOW ARTICLE INDEX

5PAGE 35 of 576

Operations Walter Power said. “We

trained 1,600 people off the street

who had never dealt cards before

and turned them into dealers.”

London native Julian Fisher

spent more than three years deal-

ing cards at the Sands Macau.

He is now a shift manager at The

Venetian Macau.

“The opportunity here was

incredible and it is continuing for

all of us,” Fisher said.

Australian native Karen Shep-

heard, assistant casino manager

at the Sands Macau, was promoted

when The Venetian opened.

“I don’t mind living in Asia and

I’ve watched this area grow,” she

said.

The availability of hotel-casino

jobs has allowed Macau residents

to shift careers and transfer into

higher-paying, more glamorous

positions.

The Venetian Macau’s public

relations department, for example,

comprises employees from various

backgrounds. Associate director of

communications Buddy Lam was a

television journalist. Public rela-

tions officer Emma Li was assis-

tant to the dean at the Macau Uni-

versity Technical School. Public

relations assistant Primrose Che

was an airline flight attendant.

Katharine Liu, director of

communications for Wynn Macau,

was in public relations for Hyatt

before joining Wynn. She grew up

in Macau and said the American

gaming companies have helped

transform the city into a world-

wide destination.

“Macau used to be a small city.

Not any more,” Liu said. “It’s a lot

more cosmopolitan now.”

The job opportunities have also

led to an influx of residents.

Jimmy Cheung, finance man-

ager for Bally Technologies’ Macau

office, moved into his position

three months ago from Hong Kong,

where he held a similar job with

Reuters. Cheung said he’s in the

process of applying for a perma-

nent visa to reside in Macau.

“Macau has a lot more jobs now

because of the gaming industry,”

said Cheung, a certified public

accountant. “There are a lot of

professionals looking at the grow-

ing number of opportunities here.”

Over at The Venetian Macau,

executives hired experienced gon-

3PART 2 of 54 SHOW ARTICLE INDEX

5PAGE 36 of 576

doliers from The Venetian

Las Vegas to operate the

gondola rides inside the

property’s Grand Canal

Shoppes, which has three

waterways. Each after-

noon, gondoliers pose for

photos with guests in the

hotel lobby.

Marciano Lapergola

said the Chinese hotel

guests are excited to

meet people from Italy.

“In Las Vegas, guests

never thought we were

actually from Italy,” Lapergola

said. “Here, they want us to sing

and be in pictures. It’s an amazing

experience.”

Even Americans have found

their way to Macau.

Reggie Martin, an Indiana native

who has lived in Macau for five

years, said there were about 500

Americans early in the decade.

Now, there are roughly 1,800.

Martin, senior manager of special

events and sports for The Venetian

Macau, also serves as the American

Consulate’s warden and key contact

for U.S. citizens visiting Macau be-

cause of knowledge of the region.

“There are some challenges for

an American,” Martin said. “Such as

getting used to the culture and driv-

ing on the opposite side of the road

from the U.S. The food is different

but the adjustment is pretty easy.”

Because of the Cotai Strip and

other projects, construction jobs

abound in Macau. Moon said MGM

Mirage employed 3,700 construc-

tion workers on the MGM Grand

Macau, of which 3,000 were from

mainland China. Las Vegas Sands

has some 15,800 construction per-

sonnel working on its Cotai Strip

properties, of which 4,800 have

come from mainland China.

Gondoliers at The Venetian Macau pose for

photos in the hotel lobby with a visitor. The

gondola operators venture into the resort's

lobby every day to greet guests at the resort.

3PART 3 of 54 SHOW ARTICLE INDEX

5PAGE 37 of 576

he image of gambling here

is etched in history. Before

Gaming Inc. arrived from

Nevada, Macau’s aging casinos,

operated by Hong Kong gambling

pioneer Stanley Ho, entertained a

predominately male clientele who

crowded baccarat tables located in

dark rooms with low ceilings and a

grungy atmosphere.

It’s a scene still played out today

in the older casinos.

Chinese gamblers, smoking ciga-

rettes and drinking tea, “squeeze”

TURNING THE TABLES

Slots gain foothold in baccarat-dominated Macau

Cath Burns, managing director of the Macau office for Bally Technologies, shows a

bank of Chinese-themed slot machines inside the company’s showroom in Macau.

3PART 3 of 54 SHOW ARTICLE INDEX

5PAGE 38 of 576

their cards before deciding how

much to wager. When a table is

“hot,” spectators often line up

three or four deep to watch the

action, yelling encouragement to

the players. When the hand goes

the house’s way, players often slam

their cards on the table in disgust

while others loudly express disap-

pointment.

Gambling is not entertainment

in Macau; it’s business.

The spacious casinos opened in

the past three years by Las Vegas

Sands Corp. and Wynn Resorts

Ltd. have overshadowed the old

gambling joints. The Sands Macau,

Wynn Macau and Venetian Macau

are neither dark nor overly smoky.

In fact, the newer resorts offer

nonsmoking gaming areas. Asian

women are as active at the tables

as their male counterparts.

The new casinos have also

brought another Las Vegas ele-

ment to Macau: slot machines

with video and ticket in-ticket out

technology.

Where baccarat was and re-

mains king, slot machines are

taking hold in the market.

In 2002, there were 808 slot ma-

chines in Macau, mostly coin oper-

ated, spinning reel games built by

companies no longer in existence.

Some of those games can still be

found in the back corners of the

old Lisboa.

By the end of this year, when

the MGM Grand Macau opens,

the market will have 12,334 slot

machines, 15 times the number

of games six years ago. By 2010,

gaming analysts predict, Macau

will house 31,156 slot machines.

The Nevada Gaming Control Board

said there were 49,246 slot ma-

chines on the Strip at the end of

August.

When the $2.4 billion Vene-

tian Macau opened Aug. 28, the

546,000-square-foot casino was

equipped with some 3,400 slot

machines, almost as many as there

were in all of Macau in 2005.

Still, VIP table game play —

high-end baccarat gamblers —

accounted for roughly 70 percent

of Macau’s $6.7 billion in gaming

revenues in 2006.

The growth of slot machines in

Macau had American operators

rushing across the Pacific to set

up shop.

3PART 3 of 54 SHOW ARTICLE INDEX

5PAGE 39 of 576

“I think this market

is destined for very big

things,” said Cath Burns,

an Australian native who

is managing director

of the Macau office for

Bally Technologies. “To

me, people will play slots

anywhere in the world

as long as the product is

good, they are having fun,

making a bit of money

and enjoying the experi-

ence. There is no differ-

ence between Chinese

slot players, American

slot players or Australian

slot players.”

Most of the major slot machine

makers are represented in Macau.

Australian-based Aristocrat

Technologies, because of its close

proximity to Southeast Asia, got

an initial foot in the door when

the market expanded in 2004.

StarGames, another Australian

slot maker that was purchased by

Shuffle Master almost two years

ago, also has a presence in Macau.

However, Bally and Reno-based

International Game Technology

have since established offices.

American casino operators were

quick to embrace slot machines in

a market that was primarily table

game driven. The Sands Macau

opened in 2004 with 666 slot ma-

chines and now has a little more

than 1,100 following an expansion

to its gaming area.

Dennis Andreaci, vice presi-

dent of table games for the Sands

Macau and Venetian Macau, said

slot machine customers were

always there for the picking in

Macau, but casinos would fill the

spaces with table games because

An electronic billboard in downtown Macau

advertises the $2.4 billion Venetian Macau.

3PART 3 of 54 SHOW ARTICLE INDEX

5PAGE 40 of 576

they were so much more profit-

able.

“There has always been this big

misconception that Asians don’t

like to play slots,” Andreaci said.

“That’s not always the case. I’ve

opened eight properties in Asia.

I’ve always had slots and they have

always done fine. The problem in

Asia is that slot machines take the

space that baccarat requires; one

baccarat table versus 10 slot ma-

chines. The baccarat table makes

so much more money.”

At the Wynn Macau, casino

executives didn’t hesitate to put in

365 new slot machines when the

casino opened in September 2006.

Wynn added 200 machines recent-

ly, and 545 machines will join the

mix in January.

Wynn Executive Vice President

of Operations Jay Dee Clayton

said the company believed Asian

customers would quickly embrace

slot machine technology, such as

cashless gaming and secondary

bonus features.

“I spent some time in Australia

and I saw how adaptive people

were to technology there,” Clayton

said. “You will also find that same

acceptance of technology in Asia.

It’s much greater than in the U.S.”

Clayton said there was just

a small learning curve for slot

machine players to accept ticket

in-ticket out slots.

“Once they get it, they love the

convenience of not schlepping

around buckets full of money,”

Clayton said.

Gaming consultant Jonathan

Galaviz, of Las Vegas-based

Globalysis, said slot makers are

concerned with guarding their in-

tellectual property in Asia, where

the copyright laws are different

from the U.S.

“They want to ensure there

won’t be a stealing of ideas,”

Galaviz said. “They want to know

there is some level of protection.

Still, over the next five to 10 years,

we’re going to see a transforma-

tion of consumer acceptance

toward slot machines in Asia.”

John Gomes, who oversees IGT’s

Macau office, said each casino

operator is finding what works in

balancing table games with slot

offerings.

“Every company exercises their

own strategy on how they see fit to

3PART 3 of 54 SHOW ARTICLE INDEX

5PAGE 41 of 576

maximize revenues,” Gomes said.

“Although this market has a strong

following for casino table games,

we do believe that as the market

matures the acceptance of elec-

tronic machines and table games

will increase due to popularity and

labor costs.”

American slot makers have to

first figure out what games and

titles work in Macau.

Wheel of Fortune, a staple in

every Las Vegas casino, is conspic-

uously absent in Macau because it

is based on an American-themed

television program. The number

four is also not used. When spoken

in Chinese, four sounds like the

word for death.

“Some American themes don’t

translate well,” Burns said. “It was

a matter of being culturally sensi-

tive and doing some investigation.

We know there are certain icons

and colors that work.”

In China, red is considered a

lucky color. IGT has a game where

the cabinet is red.

Slot machines in Macau carry

themes that are meaningful to

Asian gamblers. Chinese symbols

of good luck are prominent, such

as dragons and gold coins. IGT

offers slot machines with famous

Chinese character symbols,

including pandas, lotus flowers

and the performers doing the lion

dance.

Bally’s popular Blazing 7s

game that is played throughout

American casinos is also popular

in China. Burns said the game is

being retooled to become Blazing

8s for the opening of the MGM

Grand Macau later this year. Eight

is considered the luckiest number

in Chinese culture.

“I’m cautious about reading too

much into a game,” Burns said.

“There’s a lot we’re trying.”

Gomes said video poker, one of

IGT’s largest products in Las Ve-

gas, hasn’t caught hold in Macau.

“There are some poker ma-

chines currently place in some of

the properties in Macau,” Gomes

said. “Although poker does not

play a big percentage of the slots

mix, I do believe that as the mar-

ket matures poker machines will

become part of the product mix in

every property in the future.”

4 BRINGING MORE TO THE TABLE

3PART 3 of 54 SHOW ARTICLE INDEX

5PAGE 42 of 576

MGM Mirage International CEO Bob Moon watches as an MGM Grand

Macau dealer learns to organize gambling chips at the company’s

training center in Macau.

New table games are slowly finding an audience in

Macau’s casinos. Baccarat is still the main draw, but Asian-

themed card and dice games, such as Sic Bo, Fan Tan and

Yee Hah Hi, have gathered a following. Casino stalwarts

blackjack, roulette and craps are also being used.

Las Vegas-based Shuffle Master has been able to place

a small number of Casino War table games into the

Macau market. The company recently bought the rights

Bringing more to the table in Macau

3PART 3 of 54 SHOW ARTICLE INDEX

5PAGE 43 of 576

to Caribbean Stud Poker, which has between 175 and

200 tables in Macau. The company’s other popular titles,

Three Card Poker and Let It Ride, have yet to gain a foot-

ing. Poker is still nonexistent.

Janice Leung, the regional sales manager in Asia for

Shuffle Master subsidiary StarGames, said new table

games need to meet a number of criteria in order to be

successful. They need to be simple to understand, be per-

ceived as being fair and carry odds giving the house and

player an equal chance to win.

“With the casino growth, we’re starting to see interest

from the players in a much wider variety of table games,”

Leung said while walking through the casino at Wynn

Macau. “Players are willing to try different games. Even

at the older casinos, like the Lisboa, we’re able to bring in

different games.”

Leung said Macau’s Gaming and Inspection Bureau re-

quires that casinos, not the manufacturers, file the paper-

work to bring a new game to the market.

She added that Shuffle Master’s and StarGames multi-

player electronic table games are also starting to gain

traction.

“The market is changing, which bodes well for some

these new products,” Leung said.

The growth of gaming tables has also been a source of

revenue for products from Shuffle Masters’ casino equip-

ment division, including automated card shufflers.

3PART 4 of 54 SHOW ARTICLE INDEX

5PAGE 44 of 576

uddy Lam remembers when

the Cotai Strip was noth-

ing more than a two-lane

road that crossed a small patch of

reclaimed land, allowing Macau

residents to venture over to

Coloane Island. When the waters

of the South China Sea rose or the

Pearl River Delta overflowed, the

Cotai Strip flooded.

So Lam, who grew up in Macau,

never imagined his career would

land him in the middle of the

Cotai Strip as associate director of

communications for The Venetian

Macau, the world’s largest casino.

STRIP VS. STRIP

Cotai mirroring style, size of Las Vegas

Construction workers wait for rides after a shift at the Four Seasons, one of

more than a dozen resorts being built on the Cotai Strip.

3PART 4 of 54 SHOW ARTICLE INDEX

5PAGE 45 of 576

The Cotai Strip to-

day looks nothing like

Lam remembers it.

Chinese engineers

spent almost five years

reclaiming 250 acres of

land to turn the Cotai

Strip — named for its

location between the

islands of Coloane and

Taipa — into an indus-

trial area.

Las Vegas Sands

Corp. officials had other

ideas. The company

was building the Sands

Macau on the Macau

peninsula, about 10 minutes from

the Cotai Strip by car. When execu-

tives first saw the site, they viewed

the reclaimed land as a blank can-

vas where the casino company could

replicate the heart of Las Vegas.

Today, the Cotai Strip has more

than 20,000 hotel rooms in various

stages of construction. By 2010,

the Cotai Strip will resemble the

center of the Las Vegas Strip, with

more than a dozen hotel-casinos

ranging from a boutique size with

just 300 rooms to megaresorts

with 4,000 rooms.

Las Vegas Sands is spending

more than $12 billion on 11 differ-

ent hotel-casino projects along the

Cotai Strip. Two other companies

are spending almost $5 billion

combined on two other large Cotai

Strip development sites.

In other words, think of MGM

Mirage’s massive CityCenter proj-

ect, under development on the Las

Vegas Strip, and multiply it by five.

“Literally, I was here three or

four months ago, and the growth

in that short period of time is

amazing,” said Nevada Gaming

Construction continues on the elevator shafts that

will feed the Shangri-la, Traders, Sheraton and St.

Regis hotels on the Cotai Strip on a site near The

Venetian Macau.

3PART 4 of 54 SHOW ARTICLE INDEX

5PAGE 46 of 576

Control Board member Mark

Clayton, who traveled to Macau in

September to participate in the

Gaming Asia Pacific Summit.

“We speak of how quickly

Nevada is growing,” Clayton said.

“But I think Macau has even taken

it to the next level. Those of us

who been in Las Vegas and seen

our growth realize it is far out-

stripped by what’s happening in

Macau.”

Las Vegas Sands officials gave

Clayton a tour of The Venetian

Macau, the company’s $2.4 bil-

lion hotel-casino that anchors the

Cotai Strip.

The Venetian opened Aug.

28 with 3,000 hotel rooms, a

546,000-square-foot casino, 1 mil-

lion square feet of retail space,

more than 30 restaurants, 1.2 mil-

lion square feet of convention and

meeting space and a 15,000-seat

sports arena.

But The Venetian Macau is just

the tip of Las Vegas Sands’ plans

for the Cotai Strip.

A pedestrian passes one of several construction sites on the Cotai Strip

controlled by Las Vegas Sands Corp.More than 20,000 hotel rooms linked to

some of the world’s top hotel brands are being built on Cotai.

3PART 4 of 54 SHOW ARTICLE INDEX

5PAGE 47 of 576

The company is developing

about 150 acres of the Cotai Strip,

partnering with some of the world’s

most famous hotel brands, such as

Shangri-la, Traders, Sheraton, St.

Regis, Hilton, Conrad, Fairmont,

Raffles, Inter-Continental, Holiday

Inn and Dorsett.

The well-known hotel opera-

tors will put their names on the

resorts and operate the hotels. Las

Vegas Sands, which owns a lucra-

tive casino subconcession granted

by the Macau government, will

control spacious casinos inside

the properties.

The first Las Vegas Sands joint

venture on the Cotai Strip, a

1,000-room Four Seasons, opens

in February next to The Venetian.

The Four Seasons will also include

a retail area that will connect with

The Venetian.

The Sheraton, Shangri-la and

St. Regis properties are expected

to open by the end of 2008, with

four others planned for the end

of 2009. Las Vegas Sands offi-

cials have even trademarked the

moniker “Asia’s Las Vegas” for the

Cotai Strip site.

Also on Cotai, Melco PBL, a

joint venture between Austra-

lian casino giant Publishing and

Broadcasting Ltd., and Hong Kong

businessman Lawrence Ho, is

spending more than $2.8 billion

on City of Dreams across from The

Venetian. The site, which includes

420,000 square feet of gaming,

will have multiple hotel products,

including a Hard Rock and Grand

Hyatt.

Up the road from The Venetian

is Macau Studio City, which is

being built by a consortium of U.S.

and Chinese developers. The $1.7

billion venture will include the-

aters, television and film produc-

tion studios and 1 million square

feet of retail.

Three hotel brands — W, Ritz-

Carlton and Marriott — and a

project by Asian hotel designer

David Tang will provide 1,900

rooms. Playboy Enterprises is

developing a Playboy Club for

the site while Melco PBL has an

agreement with Studio City to

operate the 200,000-square-foot

casino.

Both City of Dreams and Studio

City are under construction, with

openings planned in 2009.

3PART 4 of 54 SHOW ARTICLE INDEX

5PAGE 48 of 576

MIKE JOHNSON/REVIEW-JOURNAL

Venetian Macau

3,000 rooms

Four Seasons

1,000 rooms

Las Vegas

Sands site

Intercontinental,

Holiday Inn, Dorsett

(rooms to be

determined)

Macau

Studio City

1,900 rooms

Immigration

Golf course

Macau

Dome

City of

Dreams

1,700 rooms

Las Vegas Sands site

Shangri-La (600 rooms)

Trader’s Hotel (1,200 rooms)

Las Vegas Sands site

Sheraton (4,000 rooms)

St. Regis (400 rooms)

Las Vegas Sands site

Hilton (1,200 rooms)

Conrad (300 rooms)

Las Vegas Sands site

Fairmont and Raffles

(1,500 rooms total)

Site controlled by

Wynn Resorts Ltd.

(development to be

determined)

Cotai Strip

To airport

3PART 4 of 54 SHOW ARTICLE INDEX

5PAGE 49 of 576

Former Las Vegas

Sands executive David

Friedman, who is serving

as co-chairman and co-

CEO of Studio City, said

he doesn’t see the project

as competition with other

developments on the

Cotai Strip.

“We’re helping to cre-

ate the critical mass that

will drive the growth of

Macau,” Friedman said.

“The more great attrac-

tions we can bring to

Macau, the more people

will want to stay longer to

see what has been created. We’re

not competition. We complement

the other projects being developed

on the Strip.”

Las Vegas Sands, which oper-

ates The Venetian in Las Vegas

and is opening the Palazzo in

December, is banking much of the

company’s financial future on this

potentially lucrative area of South-

east Asia. The casino operator is

also spending $3.6 billion on the

Marina Bay Sands on the island-

nation of Singapore.

“Probably 60 percent to 65

percent of the company’s cash flow

will come from Asia at some point,”

said Deutsche Bank gaming analyst

Bill Lerner, who also spoke at the

gaming summit. “After Singapore,

the vast majority of the company’s

cash flow will be from Asia.”

Aliana Ho’s job is to make sure

the cash continues to flow. A

former executive with Hong Kong’s

tourism commission, Ho is now the

senior vice president of destination

marketing for The Venetian Macau.

Her job is to fill the property’s mas-

sive convention space with trade

Construction workers complete a shift at the $1.7

billion Macau Studio City on the Cotai Strip.

3PART 4 of 54 SHOW ARTICLE INDEX

5PAGE 50 of 576

shows, meetings and

other events.

Forty-four events

have been booked over

the next two years at

The Venetian Macau.

The first major trade

show took place this

month. The Venetian’s

sports arena hosted an

NBA exhibition series

last week involving the

Orlando Magic, Cleve-

land Cavaliers and

the Chinese National

Team.

The joint venture

hotels are also expect-

ed to have meeting and convention

space, but not as much as The

Venetian.

“Cotai is one of the world’s larg-

est tourism projects. The opportu-

nity is tremendous,” said Ho, who

marketed Hong Kong as a tourist

destination for much of her career.

She represented Hong Kong for

several years in New York City.

“What we’re trying to do here

is build a new destination and at-

tract new market segments to the

Cotai Strip,” Ho said. “Previously,

Macau was perceived

as a short visit or

day-trip destination.

With our project here,

we think the whole

dynamic is changing.”

Ho and other Vene-

tian executives tout

the company’s experi-

ence in the meeting,

incentive, convention

and exhibition busi-

ness, which has been

dubbed the MICE

market. She said that

business model, suc-

cessful in Las Vegas

where the company’s

Strip casinos are attached to a

large convention center, would

also work in Asia.

“The Las Vegas model is what

we want to follow here,” Ho said.

“A lot of destinations are fighting

for that market. With our facilities

here, this is the ideal place for the

MICE business.”

The booming Asian economy is

centered on China and the Co-

tai Strip properties could be the

answer to a growing convention

market.

Aliana Ho, senior vice

president of destination

marketing for The

Venetian Macau, says

Cotai offers tremendous

opportunity.

3PART 4 of 54 SHOW ARTICLE INDEX

5PAGE 51 of 576

“The whole world is eyeing China

as an economic powerhouse,” Ho

said. “Being here on the Cotai Strip

is something like heaven sent. We

are right at the mouth of the Pearl

River Delta and we’re close to all

the major access points, such as the

Hong Kong airport, which has over

2,000 international flights a day.”

To help bring customers di-

rectly to the Cotai Strip, Las Vegas

Sands built and opened a new ferry

terminal adjacent to the Macau

International Airport on neighbor-

ing Taipa Island. The company will

operate a fleet of almost two dozen

high-speed ferry boats between the

terminal and ports in Hong Kong.

The other goal is to bring ad-

ditional flights into the underused

Macau International Airport.

“The infrastructure is going to

catch up and make Cotai more ac-

cessible,” Lerner said.

More development is also pos-

sible on Cotai. Wynn Resorts con-

trols a 52-acre site behind the City

of Dreams location. The company

has said it might build up to three

hotel-casinos on the location.

Harrah’s Entertainment, which

doesn’t own a gaming concession or

subconcession, entered the picture

in September, buying the Macau

Orient Golf Course behind the Stu-

dio City and near the Lotus Bridge,

one of the primary entry locations

to Macau from mainland China.

MGM Mirage and its joint ven-

ture partner, Hong Kong business-

woman Pansy Ho, are exploring

potential development sites on the

Cotai Strip.

Many Macau observers and

gaming analysts believe develop-

ment on the Cotai Strip will lead to

the creation of two Macaus — the

Cotai Strip for longer-stay destina-

tion customers and the Peninsula

region for the day-trip market.

“A different customer will come

to Cotai,” Lerner said. “There’s

also going to be more nongaming

ingredients as well.”

Casino executives on the penin-

sula, such as Wynn Macau Presi-

dent Ian Michael Coughlin, don’t

believe there will be a tremendous

split in the market.

“It’s early and I don’t think The

Venetian has proven its case quite

yet,” Coughlin said. “The large

volume properties will get their

portion of the day trip market.”

3PART 5 of 54 SHOW ARTICLE INDEX

5PAGE 52 of 576

evada’s top casino opera-

tors are busy spending

billions of dollars to

transform this area of Southern

China into Asia’s version of Las

Vegas.

Meanwhile, a joint venture fea-

turing Australia’s richest man and

the son of Macau’s controversial

casino pioneer is seeking its own

piece of the action.

Melco PBL, a partnership

TAKING ON THE GIANTS

Melco PBL challenges LV companies in Macau

A swimmer does laps in the indoor swimming pool on the 16th floor of the Crown

Macau on Taipa Island. The pool over looks the downtown area of Macau.

3PART 5 of 54 SHOW ARTICLE INDEX

5PAGE 53 of 576

between the gaming of arm of

James Packer’s Publishing and

Broadcasting Ltd. empire and

Lawrence Ho, son of Hong Kong

billionaire Stanley Ho, opened its

first casino in May. The $500 mil-

lion Crown Macau on Taipa Island

has 216 hotel rooms. The public

casino is boutique-sized and on

five levels. Crown operates several

private luxury gaming salons on

the property’s 37th floor, all with

expansive views across the harbor

of the casino cluster on the Macau

Peninsula.

The company, which became

listed a year ago on the Nasdaq

National Market, isn’t stopping

there.

Melco PBL is spending $2.8

billion to build City of Dreams

on Macau’s Cotai Strip, directly

across the road from The Venetian

Macau. Under construction and

expected to open in 2009, the proj-

ect has reportedly shunned the

idea of an underwater casino but

is still planning a 420,000 square-

foot gaming space. Multiple hotel

products totaling 1,700 rooms

are under construction, includ-

ing a 366-room Hard Rock and a

1,005-room Grand Hyatt.

The company also controls a

site on the Macau Peninsula next

to the Sands Macau and near the

Ferry Terminal. Recently, Melco

PBL told investors it would build a

project called Trinity, which would

have a casino with 215 gaming

tables and 500 slot machines, resi-

dences and a boutique hotel. The

project would open in 2010.

Melco PBL also operates the

Mocha Clubs, a chain of Macau

slot parlors, and has an agreement

to operate the casino at the Macau

Studio City, which is being built on

the opposite end of the Cotai Strip

from City of Dreams.

Clearly, Melco PBL is looking

to challenge Las Vegas-based Las

Vegas Sands Corp., Wynn Resorts

Ltd. and MGM Mirage for Macau

supremacy. At the Crown Macau,

Melco PBL is focusing on the high-

end VIP market, which accounts

for roughly 70 percent of Macau’s

overall gaming revenues.

Gaming consultant Jonathan

Galaviz of Las Vegas-based Global-

ysis said Melco PBL is able to

capitalize on its experience both

in Australia and Asia.

3PART 5 of 54 SHOW ARTICLE INDEX

5PAGE 54 of 576

“Obviously, they have a good

understanding of the competitive

dynamics in the market,” Galaviz

said.

In 2006, PBL purchased a gam-

ing subconcession owned by Wynn

Resorts for $900 million. PBL, one

of Australia’s largest media and

entertainment groups, is traded

on the Australian Stock Exchange

and has a market capitalization

of $11 billion. PBL went into

partnership with Lawrence Ho to

capitalize on different gaming op-

portunities in Macau.

PBL operates the Crown Mel-

bourne, one of Australia’s leading

hotel-casinos.

Separate from Melco, PBL paid

$22.5 million in May to purchase

a 37.5 percent stake in a holding

company that is planning a hotel-

A tourist bus passes the City of Dreams development on the Cotai Strip.

Melco PBL is spending $2.8 billion to build City of Dreams directly across the

road from The Venetian Macau. It is scheduled to open in 2009.

3PART 5 of 54 SHOW ARTICLE INDEX

5PAGE 55 of 576

casino project on the site of the

now closed Wet ‘n Wild theme park

on the Strip between the Sahara

and the under-construction Fon-

tainebleau. Crown would operate

the resort.

Crown Macau CEO Greg Hawk-

ins said Packer, the son of the

Australian business magnate

Kerry Packer, who died in Decem-

ber 2005, wants to make Crown

a global brand. Having Crown

casinos in Las Vegas, Macau and

Australia would create a world-

wide database.

“From the PBL perspective, we

see a natural evolution where that

top-end customer database grows

and customers can move around to

different Crown resorts, be it here,

Australia or Las Vegas,” Hawkins

said.

Deutsche Bank gaming analyst

Bill Lerner said Melco PBL is a

company getting into gaming in a

big way, individually and together.

The companies lost out in the

bidding process for one of two

casino sites on the island nation of

Singapore.

“They might even look at Japan

if something happens there,”

Lerner said.

Melco PBL’s initial effort in

Macau caught some interest.

Crown Macau was introduced to

Southern China television audi-

ences through an infomercial

designed as a mini-movie, “Where

Great Things Happen,” that

starred Hong Kong actor Chow

Yun-Fat, who became known to

American audiences through

“Crouching Tiger, Hidden Dragon,”

and “Pirates of the Caribbean: At

World’s End.”

The Crown Macau is tucked

into a small land parcel on Taipa,

surrounded by high-rise residen-

tial apartments, separated from

the casinos on the Peninsula and

the developing Cotai Strip. The

38-story building has just 216

hotel rooms, all with view of the

Macau Peninsula. The hotel lobby

is on the 38th floor.

“I think the physical location

where we are, nestled between the

hub of activity on the Macau Pen-

insula and the Cotai Strip, is not

a negative in our view,” Hawkins

said. “Everything we are trying to

do is to capture a niche market,

which is VIP gaming and the top of

3PART 5 of 54 SHOW ARTICLE INDEX

5PAGE 56 of 576

the mass market. That’s the space

we want to exist. We don’t want

to be everything to everybody. We

want to capture a space in this

property that appeals to that par-

ticular market.”

Crown Macau’s five-level casino

has 220 table games and 500 slot

machines, but the real action is on

the 37th floor, where several luxu-

ry gambling salons are available to

high-end customers willing to put

up at least $30 million Hong Kong

(roughly $3.9 million American) in

the casino cage for gambling.

The spacious hotel rooms have

three price levels; $569 for a

deluxe room, $1,554 for a deluxe

suite and $1,664 for a premier

suite (all in American dollars).

Crown Macau also has upscale

Japanese, Chinese and French res-

taurants. The French restaurant

offers an outdoor patio and lounge

area with views of the Peninsula.

“Ninety-five percent of the story

is premium play and VIP custom-

ers,” Lerner said. “They may have

gotten off to a slow start, but it

seems to be ramping up rather

quickly.”

Lawrence Ho, CEO and co-

chairman of Melco PBL, said in

August during the company’s

second-quarter earnings release

that going after a high-end cus-

tomer was the correct move.

“Our decision to position Crown

Macau as an up-market VIP prop-

erty is proving to be a sound one,”

Ho said in a statement. “Based

on the initial operating results

at Crown Macau, which has been

characterized by increasingly

strong VIP play, we have deter-

mined to seek opportunities to

further enhance our VIP capacity

at the property, combined with a

commensurate consolidation of

our mass market capacity.”

Hawkins said the Crown Macau

location on Taipa does not lend

itself to the mass-market, walk-in

customer base experienced at the

casinos operated by Stanley Ho

along the Peninsula. But that isn’t

the market Crown is targeting.

However, as the company’s City

of Dreams project moves forward

on the Cotai Strip while the Pen-

insula development takes shape,

Melco PBL will be in position to

capture all segments of the Macau

market, setting the company aside

3PART 5 of 54 SHOW ARTICLE INDEX

5PAGE 57 of 576

from the American casino opera-

tors.

“As a casino destination, Macau

has historically been fundamen-

tally different than what you

would experience in other parts

of the world,” Hawkins said. “It’s

an incredibly competitive environ-

ment, and from that perspective,

we have to make sure we fully un-

derstand the strategic directions

taken. All the concession holders,

including the Americans, have to

understand the framework and

the fabric of what makes Macau

tick.”

The Wynn Macau and the soon-to-open MGM Grand Macau are viewed from

the offices of Bally Technologies. The building to the right of the MGM Grand

Macau is a nongaming retail and entertainment complex being built by Hong

Kong businesswoman Pansy Ho, daughter of Hong Kong billionaire Stanley Ho.