Monday, 16 February 2015

Reversal of Fortune?

Steve Wynn unveils four Qing Dynasty vases with then CE Edmund Ho
In July 2011, casino magnate Steve Wynn purchased four rare porcelain baluster vases from the Qing Dynasty at Christie's auction in London for $12.8 million, several times more than the pre-sale estimate.

He has said that he is committed to returning Chinese treasures back to China, and this quartet of vases was donated to the Macau Special Administrative Region, where they are in a permanent collection of the Cultural Affairs Bureau's Macao Museum.

Looking back, the PR stunt seems to have been Wynn's attempt at cultivating guanxi with the mainland in the hopes it would lead to even better business in the future.

Stanley Ho with the horse's head he bought at auction in 2007
That's what Stanley Ho did too when he repatriated two animal heads that were looted from the Summer Palace in the 1800s. Ho purchased the boar's head in 2003 from a New York collector and donated it to China, and again the horse's head in 2007 from a private collection in Taiwan.

But having spent millions of dollars, what has come of it?

Instead of hoping for the investment -- oops repatriation of treasures -- to pay off, things have gone south in a really bad way.

Chinese President Xi Jinping continues to wage his battle against corruption and has not only settled his sights on gambling tables in Macau -- but worldwide.

"Some foreign countries see our nation as an enormous market, as we have investigated a series of cases," said Hua Jingfeng, a deputy bureau chief at the Ministry of Public Security. "A fair number of neighbouring countries have casinos, as they have set up offices in China to attract and drum up interest from Chinese citizens to go abroad and gamble. This will also be an area that we will crack down on."

Can we hear the pin drop in Macau, Manila, Singapore and Las Vegas?

Not only is the Chinese government cracking down on gamblers, but also the casinos trying to promote themselves. The authorities will make it harder for these "resorts" to advertise from billboards to print and even text messages.

Construction continues at Wynn Palace, phase two at Cotai
There will also be further restrictions on visa requirements, and the flow of money will be tracked by officials through UnionPay, the only domestic credit card in China.

Gambling revenues in Macau have dropped for the first time since foreign operators were allowed into the former Portuguese colony in 2002. In December alone gaming revenues plunged 30 percent.

The anti-corruption crackdown has scared the high rollers, who depended on junkets to not only get them to Macau, but also supply a steady stream of credit. Some 16 percent of junket operators shut down last year, some carrying debts.

Did Wynn know this was coming? If there were any signs, he didn't see them at all.

"China remains a big question mark. We have more questions than answers," he admitted during a conference call earlier this month. "Thousands of our Macau employees are anticipating promotion and a better life because of Wynn Palace... We have learned in the last 12 years to behave in China, and that is to listen carefully to what the leadership says and to conform with the program as we are their guest," Wynn said. "We wait for an announcement from the government with baited breath... What we are seeing in China is an entrenchment."

Wynn could only say that he hoped "our ambitions to grow in Macau will continue to develop".

Does that sound like cautious optimism or completely blindsided?

So much for the vases and the animal heads. Millions of dollars do not buy security.

While the big gamblers are barely trickling in these days, casino operators in Macau are now wondering if their $23 billion investment in their second phases to expand gambling tables and entertainment options will pay off now...

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