Is Wooing Chinese Gamblers a Winning Bet?

Is Wooing Chinese Gamblers a Winning Bet?

Chinese gamblers play at baccarat tables, inside a casino in Macau.

SourceGiovanni Panizza/Redux

Why you should care

As Asian cities race to woo Chinese gamblers, the odds are stacked in favor of one player — Beijing. 

It was as a slow-paced town that Sihanoukville, on Cambodia’s southern coast, built its reputation, for years attracting Western travelers, expats and only occasional rumors of Russian organized crime. Restaurants line long beaches with wicker chairs facing a warm ocean. But now that pace is changing, and fast, with loads of Chinese gambling enthusiasts pouring into town. In terms of money flooding in, the tide is rising fast, and yet many Cambodians are left high and dry.

The rat-a-tat of hammers and a constant cicada-like hum of saws are increasingly competing with the sounds of lapping waves, thanks to the Cambodian coast accepting massive infrastructure investment from China as part of Beijing’s Belt and Road Initiative. But alongside a Chinese deepwater port in Sihanoukville, the town is investing in casinos. Sihanoukville today has 24 registered casinos — nine more than in 2015 — whose target customers do not include the local population of fewer than 100,000 people, but Chinese tourists.

That rush to court Chinese gamblers is playing out across islands and countries on China’s periphery, from the Philippines to Laos, Singapore to South Korea and gigantic Australia to the tiny U.S.-owned island of Saipan. But as in Cambodia, the massive influx of revenue isn’t always seen as helping locals, many of whom are displaced from prime resort land. The gambling industry is sensitive to economic downturns and other factors impacting tourism. And the race to grab the Chinese gambling market frequently serves a justification to throw workers’ rights and regulations out the window, and to ignore local culture and environmental concerns.

Chinese go to Chinese. Not with the locals.

Chanthy Chea, Eco Tours Cambodia, Sihanoukville

On the surface, the upside appears clear. The Chinese spend more money than Western tourists in Sihanoukville, says Chanthy Chea, a guide for Eco Tours Cambodia, speaking of the changing tourist demographics of the town. But they “don’t respect [local] culture” and are “annoying,” he says. And locals seem to see less of the money coming in as more Chinese-run businesses pop up, he adds.

“Chinese go to Chinese,” says Chea. “Not with the locals.”

China has a long history of gambling, but under the Communist Party the practice is mostly illegal — barring state-run lotteries — on the mainland. Other than gaming outposts on the former Portuguese colony of Macau and the former British colony of Hong Kong, those wishing to roll the dice must seek foreign shores. Chinese outbound tourism was worth $261 billion in 2016, according to the U.N. World Tourism Organization. And the Chinese lost nearly $100 billion in gaming in 2014 alone, according to a report by The Economist. Foreign shores have noticed the opportunity. But it’s not always a free lunch.

Macau was the first to learn that. The small island liberalized gaming laws in 2002. Casino revenues hit a record high of $45.09 billion in 2013. But that’s come at a cost. A study in 2014 for the Tourism Management journal found locals complaining of increased prices, crime and pollution. Imposing modern resorts have marginalized the remnants of the island’s unique Portuguese character. It’s that “Macau-ization” that some fear as their countries open up to Chinese gamblers.

The U.S.-owned island of Saipan has seen massive investment from those wanting to woo primarily Chinese gamblers. But since major Chinese casino operators began construction on the tiny island earlier this decade, the commonwealth has grappled with immigration fraud as companies bring Chinese workers over on tourism visas. That, along with widespread reports of worker abuse, was enough to prompt an FBI investigation. A similar pattern of labor abuse has been reported in Cambodia.

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A hotel and casino in Macau. The company that manages the Donald Trump brand has moved to protect the name in Macau, a part of China that long ago surpassed Las Vegas to become the world’s largest gambling market.

Source Lam Yik Fei/The New York Times/Redux

The casino-resort complex Entertainment City, another competitor in the Asian gaming market, was built on reclaimed land along Manila Bay in the Philippines. Such self-contained getaways tightly restrict interaction between the local community and visitors, says Mark Evidente of the Manila-based Heritage Conservation Society. “Not a good strategy from a social development point of view,” he notes. But casino building with urban revitalization of cities could prove a win-win, says Ivan Anthony Henares, a professor at the University of the Philippines’ Asian Institute of Tourism. For that, the new projects “need to regenerate the historic core of the city,” he says.

Entertainment City was to be the next home of Nayong Pilipino, a long-running amusement park celebrating Filipino culture that lost its land after an airport expansion. Henares, once a trustee for the park, is waiting to see whether the casino-resort complex will include it. Meanwhile, similar developments are planned on more reclaimed land in Manila Bay, a global port for the past 1,000 years. “If you pave over the Bay,” cautions Evidente, “you have one less link to tell about this complex civilization here even before Spain arrived.”

There’s also economic unreliability that comes from focusing heavily on gaming tourism. A decade ago, Boten, Laos, was sitting pretty among the jungled hills near the Chinese border. Then, casinos and tourist-supporting development emerged and attracted thousands of monthly visitors from the nearest Chinese province of Yunnan. But organized crime and kidnapping, and a crackdown by authorities on both sides of the border, followed. The outpost is now a shadow of its past. Only a fraction of the original businesses are still in operation. Gambling has all but dried up. It’s further evidence of a worrying pattern, suggests Sebastian Strangio, a journalist who has covered the region. Casino development can be far from a cash cow for locals.

But there are success stories, argues Muhammad Cohen, an editor at Inside Asian Gaming. What’s needed is a comprehensive plan that includes planning for the future, he says. He thinks Singapore is a good example. In that small country the government’s capacity and will means casino developers are forced to bend to the local population’s goals.

That’s not the case in Cambodia. Chanda Mem is from Kampot, just a couple hours’ drive from Sihanoukville, and works in real estate. She says those happy on the coast are those who own property. They’re able to sell to developers and leave their once-peaceful town. She’s looking forward to the new port. But the city, to her, is ruined. A long-abandoned casino on top of Bokor mountain in her hometown has recently reopened. She says she hopes the gamblers stay on the mountain.

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