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Could Macau's High-Stakes Poker Action Cool Off?

Games Could Be Affected By Upcoming Political Turnover

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Macau. Google Maps

Casinos in Macau — a 11.9 square mile semi-autonomous piece of China — won $33.5 billion from gamblers last year. Nevada took in $10.7 billion. This widening gap could be slowed after a new group of leaders soon take over the Chinese central government.

After China is done bracing for a turnover of political and economic power, some decisions could be made that would affect the industry’s growth, according to recent reporting by the Associated Press.

This could have an effect on Macau’s poker.

One method could be anti-corruption practices and the other could be increased favoritism toward state-owned businesses as the economy cools. Nevada-based firms dominate Macau.

Corruption interwoven with China’s compressed economic boom period has plagued the mainland’s billion of persons for about as far as an outside observer can remember. Some of the financial obscenities have been grabbing headlines lately.

In October, The New York Times published a popular piece detailing the complex web of business relationships that have helped one Chinese ruler effectively become a billionaire.

Macau’s rulers have benefited from this culture and have layered corruption of their own — since the Chinese central government has rules in place making it difficult for so-called “high-rollers” to move around huge sums of gambling money. According to the Associated Press, a Chinese citizen can only take $50,000 out of the country per year.

The Cotai Strip

Despite the restrictions on money flow, Macau continues to break its own revenue records, thanks in large part to so-called “junket operators” sinking their teeth into the region and helping bring the whales to the tables. Macau casinos acquired $3.5 billion in October.

While these middlemen have been linked to some notion of Chinese organized crime, they are on their own unlawful. Since China is largely corrupt, they get away with it, but some predict that it could change as the public becomes further informed and asks more from its rulers.

A public policy professor at the University of Macau told the Associated Press that new central government leadership “will begin the process of anti-corruption activities, and this will affect Macau in a very substantial way.”

How China could possibly phase out such deeply imbedded activity remains to be seen.

The emergence of Macau as an entertainment hot spot for some immensely wealthy Chinese has caused a major shift in the high-stakes poker world.

The biggest games on the planet are now held in the former Portuguese colony, rather than in Las Vegas like they historically have been. Once in awhile they reemerge, but Las Vegas is pretty much a ghost town for big-bet games with unfathomable buy-ins. One can see $400-$800 stakes running at Aria or Bellagio, but it’s not no-limit hold’em or pot-limit Omaha.

Macau was also recently the spot for a massive $257,854 buy-in tournament. The first-place prize in that event was a whopping $6,465,560.

Richard Young at the 2012 WSOP

Some of these high-rollers recently participated in the World Series of Poker $1 million buy-in tournament. It was charity not only for Guy Laliberté’s One Drop foundation, but also for the local poker economy.

Some of poker’s best — such as Sam Trickett, Tom Dwan, Gus Hansen and Phil Ivey — have spent a lot of time in Macau trying to siphon off as much as possible during its poker boom.

In a way, the shift in high-stakes poker makes sense. The United States economy has been and perhaps will continue to be in the toilet, while China is booming comparatively. However, like always, economic systems on the planet eventually experience a cooling-off period and then stagnation. China, by many accounts, is steamrolling toward such a fate.

While the precise effect on high-stakes action will likely remain a mystery — there are probably always ways around whatever changes go into effect — poker stakes for ordinary gamblers are more predictable and appear to be on their way toward marginalization.

According to an August story from Macau Business Daily, casinos there have a limit on the number of tables they can have, but were hoping to circumvent that rule by Macau’s government permitting a favorable accounting technique — 20 tables crammed into one area would be counted as a single table. However, publicity of the development reportedly created a controversy and killed the idea since Macau’s leaders are reportedly subservient to Beijing.

Sands Macau. Google Maps

Companies like MGM Resorts International, Las Vegas Sands Corp. and Wynn Resorts Ltd. are not alone in possibly seeing less growth in their China operations. Other big-time firms could lose out from China’s leadership change this week. According to The Atlantic, foreign banking and media companies will likely lose out since state-owned businesses are favored.

It’s all in an effort to keep the economy’s growth rate strong, and benefit China more so than foreign firms looking for profits from the most populous country to ever exist.

Follow Brian Pempus on Twitter — @brianpempus

 
 
Tags: China,   Macau,   Gambling,   Poker
 
 
 
 
 
 
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