| SANYA, China
SANYA, China Feb 17 Placing bets on green-felt
baccarat tables in a new casino bar on China's southern Hainan
island, punters seem oblivious to a huge wager quietly being
placed around them, one that could potentially siphon business
from the world's largest gaming hub in Macau an hour's flight
For now, players at Jesters casino bar, part of the newly
opened Mangrove Tree Resort World on Sanya Bay, cannot win cash
- only points that they can use to pay for accommodation, luxury
goods, jewelry and artwork for sale at the resort.
Owned by art, film and real estate mogul Zhang Baoquan, the
casino bar marks the Chinese government's first tacit approval
of a gaming concept outside of Macau. Global investors,
including some of the world's biggest gaming companies, are
watching to see how the chips will fall.
"Our casino bar is the first in the country. The government
is monitoring, it's a test," Zhang told Reuters in a recent
interview at his 23rd-floor office overlooking his sprawling
173-acre property that opened late last year.
"Right now we are not at this stage (legalising casino
gambling), but my personal opinion is, in future, there is a big
possibility that they will have."
The stakes are enormous -- China's monopoly gambling site,
Macau, raked in $38 billion in gaming revenues last year,
primarily from Chinese gamblers. If Beijing were to allow
gambling elsewhere in the country, cash would follow.
It's not just the Chinese government that is watching the
development. MGM Resorts International opened a hotel in
Sanya last year and fellow U.S. casino operator Caesars
Entertainment is set to open a hotel in 2014.
An MGM spokesman said the company had no plan to introduce
"anything of this kind". Caesars did not respond to requests for
Dressed in jeans and a black-and-white Hawaiian shirt during
his interview, the 56-year-old Zhang said he aims to create an
integrated resort similar to those in Las Vegas and Singapore
where gaming, convention space and retail outlets are offered
Mangrove Tree Resort World, the newest addition to Hainan's
rapidly developing hotel scene, will be China's biggest resort
when construction is completed next year. It will have more than
4,000 rooms, a convention hall accommodating 6,000 people and
facilities including a water park.
It is one of 10 integrated resorts that Zhang is developing
around the country, including one more in Sanya and others
stretching from Lhasa in Tibet to the eastern coastal city
While the Chinese government does not permit casinos in the
country outside of Macau, Zhang - ranked by Forbes as one of the
country's 300 richest people in 2012 with $600 million - said
Hainan could become an exception.
Sensitive to existing restrictions, the soft-spoken
businessman emphasized cultural attractions such as his art
gallery that, along with the casino bar, will be incorporated
into the planned resorts.
WINNING "MANGROVE" POINTS
Inside Jesters, which models itself on Macau's casino halls
with garish chandeliers and a giant roulette wheel ceiling,
players buy tickets costing 500 yuan ($80) each. Bets range from
20-2,000 yuan in the mass area, while the high-limits area is
set at 2,000-100,000 yuan. Big whale punters will be able to bet
over 100,000 yuan once the VIP room opens on the second floor.
The casino bar, with 50 gaming tables now, is currently open
only to hotel guests, but when the resort is completed, local
residents will be allowed in.
When players win, they receive "Mangrove" points that can be
used to buy products available in the casino such as an iPad 3G
or a Rimowa suitcase. Once luxury brands open outlets within the
resort, customers will be able to spend their points in those
stores. Art work from Zhang's Beijing art gallery is also
available for purchase.
Retail stores including Prada and Louis Vuitton will be part
of a network of 20 luxury stores that will open at the resort
next year, Zhang said.
Zhang, president of Beijing conglomerate Antaeus, has the
financial backing of China Development Bank. The state lender
invested 70 percent of the cost of the Mangrove Tree expansion.
"The local governments are very supportive," says the
boyish-looking Zhang, who started off as a carpenter in his
hometown of Zhenjiang in eastern Jiangsu province, and now is
well known as an arts philanthropist and prominent film
Married to Wang Qiuyang, a mountaineer whose father Wang
Chengbin was a former army commander, Zhang said any potential
change to gambling restrictions would take time, adding that the
government would need to decide whether to let other operators
open similar casino bars.
"Gambling culturally is a very bad thing, but today there is
a difference -- gambling is a financial tool," said Zhang.
"In Asia, even North Korea has two casinos. The richest
country, Singapore, before you would never think society would
accept it there. All over the world the attitude towards casinos
is different from what it was traditionally."
SANYA AND BEYOND
China is positioning Hainan as an international tourist
destination, approving the construction of 15 large resorts and
63 five-star hotels as part of the country's five-year plan.
As Chinese spend their money in new casinos across Asia from
the Philippines to Vietnam, pressure is growing on Beijing to
keep more gamblers at home.
"To some extent, the approval of gaming on Chinese soil is
inevitable," said Gary Pinge, analyst at Macquarie Group in Hong
"With regional markets already vying for a share of the
Chinese gambling wallet, unless China brings gaming onto its own
shores, it will not only lose tax revenues to other countries,
but also the 'multiplier effect' from the consumption spend."
In the meantime, Zhang is pushing ahead with his expansion
plans. Aiming to list the Mangrove Tree brand on the Hong Kong
stock exchange in 2015, Zhang hopes to use the capital raised to
take his Mangrove Tree brand outside of China.
"Sydney, the Maldives, the United States, England, Paris and
Turkey" would all be good, said Zhang with a shy smile.