Taxation imbalance helps Las Vegas compete for Chinese New Year’s traffic
The explosive growth of gambling markets in Macau and Singapore has prompted a question in Las Vegas as the Chinese New Year celebration gets under way.
Why would an Asian high roller travel to the Strip to celebrate the lunar new year rather than visit the ultra-chic gambling salons of Asia’s gaming giants?
Much of the answer can be found in the effective tax rates on gross gaming rates in the world’s three major gaming locales. It reaches 39 percent in Macau and 20 percent in Singapore, yet is only 6.75 percent in Nevada. Quite simply, the big three casino operators in those markets — Las Vegas Sands, Wynn Resorts and MGM Resorts — are able to keep a larger share of their winnings in Las Vegas, and that’s incentive enough for them to attempt to steer Asia’s biggest gamblers to the desert for the Chinese New Year.
“If you’ve got a high-end customer in Macau, it makes sense to get them to come to Las Vegas because the casino would end up keeping a much bigger chunk of the revenues,” said Professor David Schwartz, director of UNLV’s Center for Gaming Research.
That being the case, the most lucrative two weeks for the high-end casinos of the Las Vegas Strip begins Monday when the Chinese calendar turns to 4710.
The annual celebration features casino marketers, chefs and hotel executives along Las Vegas Boulevard unveiling special menus and entertainment for guests known to gamble up to six figures per hand via million-dollar lines of credit at the city’s top baccarat and blackjack tables.
The Year of the Dragon comes shortly after the close of a 12-month period in which Macau reported $33.5 billion in casino win, far surpassing the nearly $6 billion win expected for Las Vegas when final 2011 revenue reports are completed. The booming Singapore gambling market could generate as much as $9 billion this year.
Yet Asian gamblers remain a key source of income for Las Vegas casinos.
In fact, baccarat win — the preferred game of Asian high rollers — comprises a much larger share of the money lost by gamblers in Nevada today than it was in 2003, a year before the opening of Las Vegas Sands’ mammoth Macau resort.
Nevada casinos, most of them on the Strip, won $365.9 million from baccarat players in 2003. A year later that figure jumped to $497.2 million, with the opening of Sands’ Macau-to-Las Vegas pipeline. During the 12-month period ending Nov. 30, baccarat players lost a record $1.3 billion in Nevada, with the Asia-to-Vegas connection in full swing courtesy of Sands, Wynn and MGM Resorts.
That said, if a high-end customer wishes to travel to Macau or Singapore for Chinese New Year, the companies’ casino hosts will comply. Nonetheless, the upcoming festivities for Chinese New Year find some of Asia’s wealthiest families traveling 12 hours to Las Vegas in large groups for as long as 10 days, prompting some of the city’s most expensive restaurants to add larger tables to accommodate the partiers.
“If you have seven to 10 days to travel, customers overwhelmingly want to come to Las Vegas. They get much more value for their money,” said Greg Shulman, vice president of international marketing for MGM Resorts International. “When the guests travel 7,000 to 8,000 miles, they’re really focused. They don’t have much time.”
Among the attractions awaiting visitors this year:
• An estimated 2,600 of MGM Resorts’ best casino customers, along with their family and friends, will gather Wednesday in the Bellagio ballroom for a 10-course banquet, entertainment and raffle with high-end cars as prizes.
• Asian restaurants throughout the companies' Strip properties will offer a variety of fresh seasonal dishes designed to appeal to the holiday travelers, especially a variety of noodle dishes, which represent a healthy and long life.
• Aria hotel-casino will host a million-dollar baccarat tournament that will offer a top prize of $1 million.
It’s a traditional Las Vegas nexus linking gambler, casino host, food and entertainment. The key difference circa Chinese New Year 4720: the symbiotic relationship between Macau, Singapore and the Strip.
“In some sense, Las Vegas was always the hub in the hub-and-spoke model of domestic and global gaming travel,” said one international casino industry consultant. “In this case, Las Vegas is the spoke.”