Everyone is trying to cash in on China"s gambling addiction. But does Beijing ...

The Taiwanese islands of Matsu do not seem like an ideal spot for one of

the world’s biggest casinos. Although they are ringed by rocky beaches and

azure water, only about 10,000 people live on the 19 tightly clustered
flyspecks, some 126 miles away from the main island of Taiwan. An Associated

Press reporter who visited in 2012 described Matsu’s few shops as “a complex of

decaying concrete structures that are most notable for their low-wattage

gracelessness.” Besides a small tourism industry, the islands’ chief draw is a

sorghum-based liquor that, to the uninitiated, smells like embalming fluid.

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Matsu

is best known in the United States as a footnote of Cold War history. China and

Taiwan fought a battle there in 1958 — Chiang Kai-shek’s Nationalist forces had

held onto the islands in their 1949 retreat from the mainland — causing U.S.

Secretary of State John Foster Dulles to float the idea of dropping a nuclear

weapon on the People’s Republic in order to defend Matsu and the nearby island

of Quemoy from communist incursion. As recently as 1999, tensions were high

enough that Taiwan, fearing an invasion, ordered troops stationed on Matsu and

Quemoy to cancel their holidays and remain at their posts.

Relations between China and Taiwan have improved markedly

since then — in June, the residents finally cleared the last land mine from

Matsu — and so have prospects for holidays on the islands. In 2009, in an attempt

to encourage tourism and revitalize economic growth, the Taiwanese legislature
passed a law allowing the outlying islands to vote on whether to legalize

gambling. The idea is to take what has historically been one of the islands’

greatest vulnerabilities and turn it into a strength: At its closest point,

Matsu is just a few miles from China — and its legions of big-spending gamblers.

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Gambling

is illegal in the People’s Republic, but its residents are some of the world’s

highest rollers, both domestically, where they wager billions of dollars

annually on underground games of chance, and abroad, where over the last decade

a growing number of increasingly wealthy Chinese have driven a huge boom in

casino construction and profit. Spurred by the success of Macau, the world’s

hottest gaming spot, casinos have mushroomed in Singapore, the Philippines, and

Australia. The consulting firm PricewaterhouseCoopers forecasts that the

Asia-Pacific gaming market will net nearly $80 billion in 2015, more than

double its take in 2010 — and investors and gaming companies are looking for the

next best spot to capture Chinese clientele.

William

Weidner, owner of an eponymous resort development company and former chief

operating officer for gambling giant Las Vegas Sands, wants to make Matsu that

spot. He first considered building a casino in Taiwan’s nearby Penghu archipelago,

but after that island county’s referendum to allow gambling failed, he turned

his attention to Matsu. As part of his charm offensive, Weidner has said he

will spend $2.5 billion of the project’s $8 billion budget to upgrade the

islands’ infrastructure and turn Matsu into a “world-class” resort. In addition

to a casino, the project envisions elevated causeways linking Matsu’s two main

islands, a university campus, a golf course, a ferry terminal (complete with

luxury high-speed ferries), an expanded airport built on reclaimed land,

boutique hotels, and Mediterranean-style villas for the visitors, the majority

of whom the developers expect to be Chinese.

In

April 2012, Weidner Resorts posted a slick Chinese-language public relations
video (since been made private) on its YouTube channel, seemingly to impress upon Matsu’s residents the

venture’s cosmopolitan nature. The video features glamour shots of Weidner with

celebrities ranging from George W. Bush to Sylvester Stallone and promises

Matsu locals “the opportunity to realize their dreams, create history …

and create wealth for their future generations.” To sweeten the pot, Weidner

said in July 2012 that if the casino opens and hits its targets, he’ll pay each

resident $609 a month — a sum that will rise to $2,670 after five years. The Matsunese bought the pitch, and that month the islands became the first

Taiwanese territory to approve gambling.

Yang

Sui-Sheng, the magistrate who oversees Matsu, is optimistic that the casino

will be built, but he has no illusions as to why Weidner chose his tiny corner

of the Pacific. “If casinos were legalized in China, there would be no chance

that investors would come here,” he says. This raises an interesting question:

Why doesn’t China, with its growing wealth, consumption-driven economy, and huge unmet demand, take advantage of its own gaming market?

CHINA, WHERE NO VICE is legal but every vice is tolerated, has a

complicated history with gambling. Like opium, it was rife in the early 20th

century. Gen. Chiang Kai-shek, the country’s nominal leader in the 1930s and

1940s, saw gambling as a threat to his army’s morale and unsuccessfully tried

to curtail it. After Chiang and his supporters made a run for Taiwan and Matsu

in 1949, Mao Zedong took power in China and swiftly outlawed gambling, as well

as other vices. But in the years following his death in 1976, drugs and

prostitution re-emerged, and by the 1980s and 1990s, Chinese people could be

found betting on everything from horse racing to soccer matches to cricket

fighting.

Today,

signs of gambling are nearly ubiquitous in mainland China. Tables for the

rummy-like game of mahjong dot street corners around the country, while more

serious wagering takes place in parlors that, like Chinese brothels hiding

behind foot-massage signs and barber chairs, make little attempt to hide their

purpose. “If you don’t play for a profit motive, it’s legal — but if you play to

make money, that’s illegal,” explains Chen Haiping, a researcher at Beijing

Normal University’s lottery research center. But there are also much, much

bigger games: In June, 17 people were indicted in Shanghai for the crime of

opening an online casino into which they allegedly funneled $13 billion in

bets.

There’s

a rich Chinese tradition of legitimizing morally questionable behavior like

gambling — you just call it something else. In the sixth century B.C., Confucius

established his theory of the “rectification of names.” He believed that social

disorder stemmed from the failure to accurately perceive reality, and the

solution was describing things as they are. Ever since then, the Chinese have

tried to subvert Confucius’s dictum: Feet shaped by the excruciatingly painful

process of foot-binding, for example, were called “golden lotuses.” The communists under Mao

were notoriously good at euphemisms. The famine caused by the collectivist

government program known as the Great Leap Forward, which killed tens of

millions of people, is referred to as “the three years of natural disasters.”

And euphemism remains the key to vice in China. Because a percentage of state

lottery proceeds accrue to the Ministry of Civil Affairs, the lottery is not

considered gambling but a legal, even beneficial, “social welfare” project.

Foreign

gaming companies have tried to use this trick in their fitful efforts to

penetrate the Chinese market. In 1993, for example, a Malaysian company opened

a slot machine parlor in the dreary northeast city of Harbin, but because it

paid out “gifts,” not cash, it was licensed for “entertainment,” not gambling,

according to Hong Kong’s South China Morning Post. Harbin tolerated

foreign slot machines for a little while — a 2010 article in a provincial

newspaper described 1994 and 1995 as “the craziest era for gambling” in the

city — until it formally banned the machines in January 1996.

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Everyone is trying to cash in on China"s gambling addiction. But does Beijing ...