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November 26, 2014

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Macau provides lesson in supply and demand

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Some things you must see for yourself to appreciate their scale and grandeur: Mount Rushmore, the Palace of Versailles, Arlington National Cemetery, Jay Leno’s cranium.

You can add Macau to that list.

Las Vegas dubs itself the gaming capital of the world, but that’s a moniker more soaked in nostalgia than in reality. It’s the same as people calling Muhammad Ali “champ” or Sophia Loren “gorgeous.” Sure, it made sense 30 or 40 years ago, but times have moved on.

And in casino gambling, they have moved to Macau. This 11-square-mile peninsula that hangs off the coast of southeast China is the new Las Vegas. Well, that’s not true. Las Vegas is the new Las Vegas, perpetually reinventing itself as an international attraction of diverse entertainment options. Macau is actually the new “old” Las Vegas, the Las Vegas of the 1970s and ’80s, the Las Vegas glamorized in Nicholas Pileggi novels and Martin Scorsese movies, when everything was about one thing, the casino.

Gamblers at Macau casinos lost $38 billion last year and are expected to lose more than $45 billion this year. On the Las Vegas Strip last year, they lost $6 billion. But numbers are numbing; they are so large they lose context, like the inches to the bottom of the ocean or the miles from Earth to the sun. Rather, to understand Macau is to see Macau. Because until you have, you haven’t.

And what exactly do you see?

From the top of the escalator at Grand Lisboa, you see wave after wave of customers pouring into the casino. There is no letup, not even for a minute. And this is a just some ordinary Sunday afternoon in the middle of May. Imagine this scene during the Moon Festival or Chinese New Year. Looking down, you’d feel like a prison guard at Bastille on July 14, 1789, as half of Paris is about to overrun you.

From the main gaming floor of the Sands, you see hundreds of baccarat tables, some positively swarming with players. The ones standing up have to contort their bodies to get their chips down before the first card is drawn. Forget about losing a bet; you might lose a finger or an arm in that scrum.

From the Taipi Bridge, you see a skyline that’s starting to rival ours back home. There’s the familiar copper curve of the Wynn, the gold blossoming lotus flower of Grand Lisboa and the strikingly beautiful three-color, Neapolitan ice cream look of the MGM Grand.

And from the Cotai Strip, you see where the former state bird of Nevada — the crane — migrated to. Construction abounds and the scale is massive. Heavy equipment is staged throughout the site owned by Wynn Resorts, and within three years what is now nothing but 50 acres of reclaimed swampland will be the most expensive resort the company has ever built.

The secret of Macau’s success, of course, is no secret. It’s the only place in China that allows casino gambling. Visitation from the mainland is restricted (Macau, like nearby Hong Kong, requires travel visas for entry), but that is merely a speed bump for growth. Take the world’s largest population, a booming economy, a cultural penchant for gambling and a geographic monopoly, and what do you expect? Supply, for the moment at least, doesn’t stand a chance against demand.

Anyone can see that.

Roger Snow is the chief product officer of SHFL entertainment. He was in Macau this month at the Global Gaming Expo.

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