Matsu rising above the fog

The slow drive to bring casino gambling to Taiwan is reaching key milestones with the cabinet finally coming to agreement on a draft gaming law which it has sent on to the legislature. Our cover story describes key challenges remaining before Weidner Resorts or anyone else can take advantage, including the securing of a customer base, while our opinion piece weighs the strengths and shortcomings of the country’s draft gaming law

Taiwan has never been a prime tourist destination and the handful of small island groups it controls have largely been neglected by all but the most far-ranging backpackers

Among the most remote are the small Matsu islands, home to only 9,755 inhabitants. The islands and their villages are charming and boast beautiful vistas and a subterranean wharf but are prone to fog. Most appealing for casino operators is that the islands are only about 10 nautical miles from mainland China, close to Fuzhou, a prosperous provincial capital.

Almost as important, the islanders embraced casino gambling in a referendum last year, putting the onus on the national government, which had enabled Matsu’s vote, to set out a legal framework for casino licensing, operation and regulation. After months of clashes between ministries over taxes and other details, the cabinet sent an agreed draft gaming bill to the legislature earlier this month.

The islands are only about 10 nautical miles from mainland China, close to Fuzhou, a prosperous provincial capital

Given the governing Kuomintang party’s strong position, the bill is well positioned to pass this summer, but will face a fight from some opposition legislators as well as anti-gambling campaigners mounting a last stand against casinos coming to Taiwan.

Their immediate target is William Weidner, the veteran American casino executive who has been the leading proponent of bringing gambling to Matsu. His development plan has expanded as the legalization process has advanced and now envisages $8 billion of investment to create a “Mediterranean of Asia”.

This would involve several clusters of hotel towers of roughly 30 floors each and totalling 26,000 rooms as well as golf courses, spas and convention halls. Some $2.5 billion, which he says Bank of America, JPMorgan, Deutsche Bank and Credit Suisse have agreed to finance, would go into infrastructure improvements including upgrading one airport to handle Matsu’s first jets, constructing a ferry harbor and yacht terminal and erecting a bridge between the two central Matsu islands.

Weidner has promised that after his resort opens, each resident of the islands will receive monthly compensation of NT$18,000 ($609), with the payments to rise to NT$80,000 after five years of operation.



William Weidner

The entrepreneur 

William P. Weidner is best known for having served 13 years as chief operating officer of Las Vegas Sands Corp., during which time the company won rights to open casinos in Macau and Singapore. He left the company in 2009 after falling out with Sheldon Adelson, the company’s controlling shareholder, chairman and chief executive. Aside from Weidner Holdings, he is also chairman and chief executive of Global Gaming Asset Management LLC, a group he formed with other former Sands executives backed by investment bank Cantor Fitzgerald. Global Gaming operates the Solaire Casino that opened in Manila in March and has a 9 percent stake in the company that owns Solaire.


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Timeline of Taiwan gaming history

17th, 18th and 19th century – Gambling widespread, involving more than a hundred games

1896 – The most popular game, flower match game, becomes so popular that it begins to cause social problems.

1935 – The Criminal Code of the Republic of China prohibits public gambling and gambling venues such as casinos.

1951 – The Uniform Invoice lottery begins. Receipts for all legal purchases have a number for a lottery that is held every two months.

1997 – Three Taiwanese professional baseball players confess to fixing matches under the direction of illegal gambling syndicates.

2002 – The government launches a computerized lottery.

2008 – The government launches a sports lottery.

2009 – Amendments to the Offshore Islands Development Act legalize the formation of casinos if a majority of local residents agree at a referendum.

September 2009 – The residents of the Penghu islands reject casinos in a 17,359 vote to 13,397 referendum.

July 2012 – The residents of  Matsu vote in favor of allowing the construction of casino resorts and Weidner Resorts Taiwan introduces its plan for one.

May 2013 – The Executive Yuan approves draft version of the Gaming Act to be submitted to the Legislative Yuan for passage.



The alternatives

Taiwan’s government, aside from Taiwan itself, controls 121 islands, though just 25 are inhabited. The most prominent are the island groups of Penghu, Kinmen and Matsu to the west, with the latter two just off the coast of mainland China. Penghu residents rejected casino gambling in a 2009 vote but some residents are on a petition drive to hold a new poll. Kinmen is attractive given its close proximity to Xiamen, a large port Chinese city and superior infrastructure to Matsu, but officials have yet to put the question of casinos to a public vote.



Other interested parties

Except for Weidner Holdings, potential casino operators have kept a low profile regarding Taiwan’s offshore islands, perhaps waiting for the formal application process to begin. Several top gaming executives have visited Kinmen or Penghu though in recent years, including representatives of Caesars Entertainment and Melco Crown Entertainment. Melco is also one of a few operators with a Taiwan presence, though these are as much for recruiting local high rollers as for developing casinos locally. Las Vegas Sands and MGM Resorts International have also expressed general interest in Taiwan. The only local company to show public interest is Howarm Construction, which last year bought the Tinian Dynasty Hotel & Casino in the Northern Marianas Islands. 


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