By Grace Ng
IT WAS a group of Chinese high-rollers who helped bankroll Macau's success as the world's top gambling playground.
These VIP clients even had a nickname - ganbu-lers - a pun on ganbu, which means party cadres.
One of them was town chief Li Weimin, who gambled away 90 million yuan (S$20 million) embezzled from the coffers of Tangxia, one of China's richest towns.
He was sentenced to 20 years' jail in 2006, and Macau lost a big customer. But there were other big spenders to take his place.
Since travel restrictions from mainland China to Macau - the only jurisdiction in China where gambling is legal - were eased in 2003, tens of millions have answered the casino hub's siren call.
They included officials who, state prosecutors say, supplemented their monthly pay of several thousand yuan with cash from state coffers and bribes.
While it remains unclear how much these cash-rich officials contributed to Macau's earnings, a 2008 study of 99 high-rollers showed that 60 per cent had some state affiliation - either party officials, senior managers at state- owned enterprises or cashiers at state businesses.
It was clear that mainland money was driving up gaming-revenue growth - from 23 per cent in 2006 to 47 per cent in 2007.
Beijing, which had little luck enforcing a ban on gambling by government or party officials, finally found its trump card - a clampdown on visas.
New visa rules announced last October limited mainland Chinese who travel independently to just one trip every three months, and for no more than seven days. This was down from two trips a month before June last year.
The impact on Macau was brutal and almost immediate: gaming revenues dived 7.3 per cent in the first quarter last year, normally the peak season, from the previous quarter.
Still, Macau managed to report full-year 2008 revenue of 109 billion patacas (S$20.5 billion), though some analysts predicted that this year's figure might plunge as much as 14 per cent.
Reasons include the casino glut, intense competition and the global downturn. But the key reason is still the visa clampdown, according to Mr Anil Daswani, a Citigroup analyst in Hong Kong.
After all, Chinese visitors make up about 70 per cent of the 40-odd million tourists to Macau. And it was the big-stakes gamblers who contributed an estimated two-thirds of Macau's total gambling revenue.
Take the case of Li. He made 67 trips to Macau in 2004, losing as much as four million yuan in a single night.
Professor Zeng Zhonglu of the Macau Polytechnic Institute, who did a study of 99 Chinese high- rollers - found that 33 admitted losing an average of US$2.7 million (S$4 million) each.
The official China Daily reported recently that Beijing was sending a 'clear message' that it would hunt down gambling officials and punish them.
It said that this month, 50 officials in Guangdong, a short trip away from Macau, were investigated. Six were jailed or punished for gambling using state funds.
One of them was ex-party cadre Wu Xingkui, who pillaged millions of yuan to fund his gambling habit even as he carried out operations against gambling, pornography and drugs in Yunfu town. He was sentenced to four years' jail.
With the clampdown on ganbu-lers and falling tourist arrivals, should Macau be very worried?
The stock market thought so - Macau casino companies saw their shares plunge by more than 20 per cent in value after Beijing made clear recently it was not about to lift travel restrictions.
Until these rules are lifted - possibly when a new Macau chief executive takes office after elections in June - the gaming sector is likely to remain sluggish, said Morgan Stanley analysts Praveen Choudhary and Corey Chan in a note. They predict a 10 per cent drop in revenue this year.
Macau's suffering is evident: hotel and new casino development plans have been abandoned, luxury stores and restaurants are deserted, and thousands of construction and casino workers have been retrenched.
But analysts also note that this may force Macau to become a more well-rounded playground like Las Vegas, which derives about half of its revenue from non-gambling entertainment for families and tourists.
When Chinese Vice-President Xi Jinping, who also oversees Hong Kong and Macau affairs, was in Macau earlier this month, he avoided entering any casino.
So is it game over for China's Las Vegas? Some analysts do not think so, saying that it would not be a bad thing if Macau can transform itself into a more well-rounded playground.
This article was first published in The Straits Times on Jan 26, 2009.
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