Global investors watch how chips fall in China’s new cashless casino bar

By Farah Master, Reuters

SANYA, China — 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 away. 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 (legalizing 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 US$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 comment.

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 together. 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 Qingdao.

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 US$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.