China’s Fondness for Gambling

Most of the information for writing both of my books, The Wild Wild East and Doing the China Tango, came from interacting with the Chinese people for over a decade. During that time I’ve had a chance to observe and socialize with them at the grass roots level. One thing that surprised me when I really got to know them is their propensity to gamble. This transcends age groups, socio-economic barriers, and other societal delineations. Perhaps no other culture has an affinity for gambling more than the Chinese. I asked the CEO of a company I was visiting why the Chinese people loved to gamble so much. His reply: we’re an optimistic people and this optimism leads us to believe that everything will turn out fine in the end. Even when things seem to be going against us, we believe a change of luck is just around the corner.

Although gambling is illegal in China, the law against gambling isn’t enforced and is generally ignored, unless you plan to open a casino. It’s estimated that, outside of the country’s two sanctioned lotteries, an estimated over $146 billion is wagered illegally in China each year. This is a staggering figure considering that 700 million people, or more than half of the population, live in rural areas where the average annual income is approximately $770 per year. Most of this gambling seems to be in the form of card games and Mahjong, a game played with small tiles based on Chinese characters and symbols.

Mainland China has only one legal form of gambling – two lotteries which generate about $40 billion per year in gross sales revenue. Outside of these national lotteries, the country has no sanctioned form of gambling.

Legalized gambling, outside of these two lotteries, can only take place in Macau, which is a special administrative region (SAR) of China. Prior to becoming an SAR, Macau was a Portuguese territory until it was handed over to China in 1999. When China assumed control it elected to maintain gambling in Macau. Asians now view it as the Monte Carlo of the Orient since gambling has been legal there since the 1850s.

Macau is a short hydrofoil ride from Hong Kong, and it’s also accessible by flying from one of one of a number of Chinese and international cities. When the Chinese assumed control of Macau it encouraged Las Vegas casino owners to come and open up Las Vegas style gambling there. Many did so and, with the advent of these casinos, Macau overtook Las Vegas in gaming revenue in 2007 and has never looked back since. This is in spite of the fact that Macau only attracts 27 million tourists a year versus 39.7 million for Las Vegas. However, the reason Macau, with 33 casinos, makes so much more money than Las Vegas, with 122 casinos, is that the average person gambling in Macau will gamble with three times more money than the average gambler in Las Vegas. In addition, numbers can be deceiving. Macau casinos tend to be very large and, on occasion, I’ve seen gamblers stacked three deep at tables placing their bets. In fact, 70% of Macau’s government income is a result of gambling tourism, primarily from mainland Chinese and Hong Kong residents.

One of the first things I noticed when I went to Macau is that it’s totally different from Las Vegas. It has no Strip. In Macau everything is spread out and you need a taxi to go from one cluster of casinos to the other. The second thing I noticed is that there are few fine dining restaurants at the Casino hotels, and that the few sit-down casual restaurants they have, such as I saw on the bottom floor of the Venetian Macau, for example, had very few customers. I viewed the same lack of attendance for Cirque du Soleil’s show, which I went to at the Venetian. The show there seemed unique to Macau, but every bit as fantastic as I’ve seen in the U.S. However, the theatre was only about a third filled.

The reason this is that the Chinese love to gamble and the average Chinese person is not going to sit in a fine restaurant for an appropriately long dinner, or go to a show, when they could be gambling. Moreover, they’re not going to spend money on a fine dining restaurant or a show when they could use that money to gamble. That’s the average person’s mindset. When they do eat they usually choose the food court which can get them in and out quickly and inexpensively. The food court is pretty basic, even at the Venetian, with Fat Burger occupying a prominent space. I plead guilty to eating there myself and the burger was great!

Gambling in Asia is a growing industry with Asia-Pacific casino gaming projected to increase from $34 billion in 2010 to $80 billion by 2015.

Alan Refkin

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