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Item:	----------------------------------------------------------- Macau lacks the glitz of Las Vegas, but its location makes it a compelling investment Bloomberg February 1, 2004 Macau lacks the glitz of Las Vegas, but its location makes it a compelling investment February 1, 2004 By Bloomberg 'No spitting." It's not the kind of sign you'd expect in a casino, especially a celebrated one with 30 years of history. Those words, in Chinese, English and Portuguese, greet punters at the sprawling Casino Lisboa. Welcome to Macau, the Las Vegas of Asia. At least that what this former Portuguese colony aspires to be. After its reversion to Chinese rule in 1999, this tiny city 65km from Hong Kong began wooing the biggest names in global gambling. Las Vegas's most powerful casino billionaires - including Steve Wynn, the chief executive of Wynn Resorts, and Sheldon Adelson, the chairman of Las Vegas Sands - wasted no time. Macau, after all, is said to be Asia's emerging entertainment Mecca. Why? Demographics. "Macau is in a unique position because within a reasonable flight time of four hours, we can reach two-thirds of the world's population," says Francis Lui, a director at Galaxy Resort & Casino, which is spending $591 million to build three hotel-casinos. Much of the excitement over this city can be explained in one word: China. Macau sits on the periphery of the world's most dynamic economy, and Beijing is easing travel restrictions to allow mainlanders to visit Hong Kong and Macau. For investors looking to ride China's economic wave, Macau could be just the thing. Consider this factoid: Las Vegas's 200-plus casinos get 33 million visitors a year. Macau, with 11 casinos, attracts a third of that each year. And Chinese tourists make up about half of all visitors to Macau. Walking Macau's cobble-stoned streets these days, the mainland China effect is unmistakable. Its proximity may make Macau's gaming industry a compelling investment. Asia's gambling market is far from saturated and China's rise means a growing source of demand. Global competition is another plus. In 2001, Macau opted not to renew the monopoly held by billionaire Stanley Ho and his Sociedade de Turismo e Diversoes de Macau. That cleared the way for the casino moguls from Las Vegas. Until now, gambling in Macau has hardly been glamorous. The centrepiece, the Lisboa, is a gaudy, canary-coloured building shaped like a giant birdcage. Patrons joke that its design is meant to trap folk who might be tempted to cut their losses and leave. Inside, thousands of casually dressed mainland Chinese and Hong Kongers pack four storeys of drably decorated rooms. The air is thick with cigarette smoke, which oddly seems to complement the faded carpets and walls. Punters crowd three or four deep, elbowing their way closer to its 146 betting tables. Arguments break out over empty chairs. While Macau's casinos are among the most animated anywhere, they are a far cry from Las Vegas's plush, spacious ballrooms or Europe's elegant parlours. It's this kind of glamour and romance, so lacking in Macau, that American gaming moguls hope to provide. Macau hopes that bringing in the Vegas crowd will morph it into a general tourist destination, shaking off its strong association with gambling and other vices. The government requires the companies to pay a 35 percent casino tax and 4 percent of sales to finance the city's development, tourism promotion and charity activities. Yet it will be interesting to see if US operators change Macau, or if the place changes them. For now, it has its hands full satisfying Chinese demand. Rolling the dice on Macau might not be such a risky investment.

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