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Laos Vegas: A Chinese Entrepreneur Crosses the Border to Build His Gambling Empire Laos Vegas: A Chinese Entrepreneur Crosses the Border to Build His Gambling Empire

Laos Vegas: A Chinese Entrepreneur Crosses the Border to Build His Gambling Empire

by Lauren Hilgers

March 16, 2012


In the northeast
corner of the Golden Triangle, where the Ruak River is swallowed by the Mekong and three countries meet in a confluence of sandbars, hills, and inhospitable jungle, there is a gigantic, golden crown just visible over a cluster of Laotian palm trees. It sits on top of the Kings Romans Casino, a Chinese-run gambling operation that pops up suddenly in a stretch of otherwise unbroken green. At night, the crown’s arches light up a dark riverbank in blue, red, and yellow. From the Thai side of the border, the faint pumping of bass can be heard over the water. Whatever else might be going on along the river is concealed by jungle, but Kings Romans isn’t trying to hide. 

The casino, and the patch of land it sits on, is the invention of a single, ambitious Chinese investor named Wei Zhao. The enterprising 60-year-old hatched the idea for a “special economic zone”—a stretch of Laotian land run by Chinese investors—in 2005, and the casino opened its doors four years later. “When we first came here, there was nothing!” says one of Zhao’s partners, a Portuguese man from Macau named Luis Nunes. “There weren’t even roads.” The fleet of Hummers they keep at the casino today was a necessity back then to avoid getting stuck in the mud. 
 
Nunes is telling me this from underneath a chandelier at the Chinese restaurant that now sits attached to the casino. Outside, croupiers in matching black and purple stand at attention, getting their evening pep talk. The parking lot is empty save for a few parked cars and the occasional employee rolling by in a golf cart. Not far from the casino, the pavement disappears and the roads go muddy. Inside, however, no one acts like Kings Romans is an outpost. It is, instead, “Macau on the Mekong,” where Chinese and Thai customers casually slip coins into slot machines or play endless hands of baccarat in the shadow of a huge statue of Zeus. There are Victorian-era murals on the walls and a playscape for kids, and everyone is welcome to a complimentary buffet dinner. 
 
In the Chinese restaurant, a team of gaming managers and consultants are toasting each other with a bottle of rice liquor. The conversation moves back and forth between Mandarin, Cantonese, and English, and as the booze flows, the enthusiasm for the future of Kings Romans grows louder. “Baccarat is the best game in Asia!” Nunes announces. He turns to me to explain the allure. “You just lift the corner of the cards,” he says, miming a gambler peeking at his hand. “Sometimes you don’t even know what they are! It is very exciting! It’s more exciting, of course, when you’ve bet your own money.” 
 
Nunes and everyone at the table have high expectations for Kings Romans. The casino is small compared to what they’re used to in Asia’s gambling capital, Macau (“Here, if you show up with only 1 million renminbi [$154,000], you’re already a high roller!” someone laughs), but they all came for Zhao. He is the best man for picking the right place at the right time, they say. The Golden Triangle is a little out of the way, Nunes admits, but he thinks the numbers of gamblers will increase. “I have this theory,” he says. “I can’t prove it, but most people think I’m right. Chinese people are really good at math—it’s more than just studying it from a young age. I think it’s because they’ve loved to gamble since the beginning of time.” 
 
* * *
In the Kings Romans Casino, people tend to talk about Zhao like he’s a visionary. He is a self-made man who, over the past 20 years, has carved out a place for himself in Asia’s gambling world. He runs VIP rooms in Macau and built and operated a successful border casino in Burma (officially Myanmar). In person, he projects the kind of relaxed charisma you might expect from a gracefully aging movie star. Lanky and slow moving, Zhao puts people at ease and leaves them wondering what it must take to make him lose his cool. 
 
When I first meet him, it is in the “Red Building,” a two-story guesthouse built a few hundred yards from the casino. It is designed to resemble Beijing’s Forbidden City. The ceilings are made of wooden beams painted in red and gold, and a pair of stone lions guard the bridge outside. A large golden throne dominates the entryway. Zhao shows up wearing linen pants and a shiny silk shirt, unbuttoned at the top. His black hair is slicked back, betraying not a strand of gray. A woman in traditional Chinese silk pours us tea on a carpeted platform and someone turns up some atmospheric music. Zhao settles into his polished wooden seat and gives me an unhurried smile. His skin is pockmarked and rough, and his bottom teeth are stained. When no one in the room accepts his offer of a cigarette, he shrugs and says, “Well, I smoke,” and lights up. “When we came here,” he says smoothly, using a Chinese word for common people, “we thought, ‘What can we do for the lao bai xing?’ That has always been our goal.” 
 
Zhao first visited Laos on a vacation, and had no intention of making an investment here. A few months prior, he tells me, he had been convinced he wanted to open a casino in the Philippines. But on arriving, he was struck by how beautiful the place was. “It was February and the kapok trees were all blooming together,” he says. “This makes a deep impression on a Chinese person— that they were blooming in the middle of winter.” Zhao decided then and there that he wanted to build not only a casino, but a prosperous, thriving new economy on the Mekong. 
 
Zhao approached the Laotian government and negotiated a 99-year lease for a 39-square-mile stretch of land, an area much bigger than the island of Macau. The contract created the Golden Triangle Special Economic Zone, and Zhao took the job of running it. He sets the economic policy, makes his own tax laws, and runs the zone by the Chinese clock. The Golden Triangle SEZ, he says, is a place where Chinese employees work side by side with Thais and Laotians and Burmese in a kind of casino-led paradise. Zhao does not charge taxes. Everybody in the zone is free to live how they want. Everybody should expect to benefit. 
 
From the beginning, Zhao knew the spot he had picked was notorious. The Golden Triangle region is a 150,000-square-mile area that spans parts of Laos, Thailand, and Burma. Rumor has it the area got its name for the gold that the opium business once brought in. Today, the drug of choice is methamphetamine. The borders are porous and trade on the river is hard to regulate. Historically, drug lords have wielded more influence than any central government, and Zhao’s SEZ is located in the stomping grounds of one particularly powerful drug runner named Naw Kham. 
 
Naw Kham is a Shan minority from the Burmese side of the border and a wanted man in Thailand, Burma, Laos, and China. His forces (called the “Hawngleuk militia”) exert control through Laos and northern Thailand. His speedboats are said to show up on the river and levy taxes on passing cargo boats, particularly the Chinese ones. In 2008, Naw Kham’s forces shot up a Chinese patrol boat. In April 2011, 34 crew members on three Chinese boats were briefly taken hostage by a group of pirates assumed to be answering to the drug lord. This past October, 13 Chinese were shot and killed while sitting in two small boats full of methamphetamine. The events have sent ripples through the burgeoning tourist industry. 
 
“Our business is not to stop people if they want to traffic drugs,” Zhao says. “Our business is the economy.” But if Laotians are searching for an alternative form of employment, the casino is ready to hire them. “The Golden Triangle is a name with a bad reputation,” he says. “But then again, people will definitely remember it.”
 
* * *
Heilongjiang, where Zhao was born, is a long way from Laos. It is in China’s far north and shares borders with Russia and North Korea. The province is most famous for its annual winter ice festival. Zhao was born poor, and his father died when he was 5. He quit school with only an elementary-level education. “People like me,” he says, “have to rely on their hard work and their wits.” As a teenager during the Cultural Revolution, he was swept into the ranks of Mao’s barefoot doctors along with hundreds of thousands of others across China. The group was lightly trained in first aid, immunizations, and health education. Barefoot doctors were expected to continue farming in communal fields, but would also act as a first line of defense against illness and disease. 
 
“You felt privileged to be doing it,” Zhao says. “I think it was effective. I think it impacted people’s lives.” Being a barefoot doctor, however, had one major drawback. The work required that you stay in the same place and remain a peasant. Zhao had no intention of doing either of these things. As soon as the constrictions of the Cultural Revolution began to loosen, he went into business on his own. 
 
“I started selling things,” he says. “It didn’t matter what it was—the model was to take something from one town and go sell it in another. We were trying to improve our lives. Although … technically it was illegal.” 
 
Zhao’s work as a traveling salesman eventually took him out of Heilongjiang to one of China’s southernmost provinces. In the 1980s, Zhao says, the southern city Guangzhou was a window into economic reform. “Every day in northeastern China, there was good stuff coming up from Guangzhou,” he says. So he went. He sold electronics and makeup and illegal videocassettes, and finally, in 1990, he applied for permission to do business in Macau. Back then, he says, his only goal was to make a profit. He made friends in the casino business, learned the ropes, and eventually invested his money in a few local VIP rooms. 
 
“In China, you just wanted to raise your standard of living,” he says. “You think your whole life you will be at the same level, you’ll have to report back to the same boss. In Macau, people think, ‘I might be a small person now, but in a few years, when I have more money, I won’t have to listen to my boss, or my older brother, or anyone.’ In Macau you start considering things that you wouldn’t have dared think of in mainland China.” 
 
After a few years in Macau, Zhao thought of moving to Burma. He was on vacation in China’s southern Yunnan Province when a friend of his suggested he look at making an investment just over the border. “In Macau it was really hard to break in and open your own VIP room,” Zhao says. In Burma, it was relatively easy. 
 
The location he selected had been peaceful for around 20 years but was not under government control. So to open a casino, Zhao didn’t have to notify the government. He just had to reach an agreement with the local rebels and build his hotel and casino. Ninety percent of his customers were Chinese. “It really is extremely convenient,” he says. “They can just walk over the border with their money.” 
 
It was easy to set up, but after a decade or so, Burma was starting to lose its charm. Zhao wasn’t convinced that the recent decades of peace portended a similar future. There were Russian, Korean, Chinese, and Burmese gambling operators mixed together along the border. And, although he doesn’t mention it, the area is another hotspot for methamphetamine trafficking. On and off, the Chinese government would put pressure on the border area to clean up its act. “Burma just didn’t seem like it would work in the long term,” Zhao says flatly.
 
* * *


 
A casino in the jungle may not be everyone’s idea of paradise, but in Southeast Asia, Zhao is not the only one with the idea. Chinese money has been trickling south over the border for more than a decade and, in recent years, the trickle has swelled. State-owned companies are building dams on nearly all of the region’s major rivers. In Vientiane, Laos’ capital, you can find a Chinese-funded sports complex and real estate development. And all along China’s borders, you find casinos. 
 
While governments tend to embrace the investments coming over, locals are watching the money with increasing suspicion. Chinese boats dominate their trade routes. In places like northern Laos, Chinese investors are building rubber plantations using entirely Chinese labor forces. There is a reason that Naw Kham causes trouble with Chinese boats. Investors have a tendency to bulldoze local interests as they do business—one project in Cambodia drew local protests when it called for the forced relocation of 4,000 people. In Burma, protests stopped a dam project that would have flooded an area larger than Singapore. In Laos, people have learned from experience to view casinos with suspicion.  
 
Gambling is against the law in mainland China, but that doesn’t seem to be stopping China’s gamblers from placing bets. Macau is the only Chinese territory where gambling is legal, and more money changes hands there each year than it does in Las Vegas. On the mainland, underground casinos bring in an estimated 2 trillion renminbi ($315 billion) annually. There are two legally run state lotteries in the country, both so popular that a few years ago a pair of bank robbers made a beeline from the scene of a crime to a lottery outlet, blowing the millions they had just stolen on tickets. 
 
“China’s got a middle class and above that is larger in number than the entire population of the United States,” says I. Nelson Rose, an expert on gambling law who splits his time between California and Macau. “And the only outlets they have for gambling are in Macau and these few border casinos.” 
 
Border casinos are attractive to Chinese investors for two reasons—they fill a huge demand for gambling and they facilitate the process of getting money out of the mainland. China puts strict limits on how much of its currency can cross the border, and people from mainland China are required to obtain a special visa to visit Macau. Casinos have solved the problem by offering to issue gambling chips in Macau for renminbi deposited in banks on the mainland. Gamblers can play a few hands and then cash their chips in for another currency. No one seems to know how much money changes hands illicitly in Macau, but accusations of money laundering fly back  and forth regularly. 
 
Two years ago, in an attempt to curb the outflow of citizens and money, China banned government officials from gambling in Macau. But demand for the casinos has only increased. Rose, the gambling law expert, has visited casinos in Vietnam and Cambodia. Singapore recently opened two casinos that he says are “fantastically successful.” Gambling establishments can even be found in North Korea, where Chinese tourists might stop off to play a game of baccarat. 
 
In Laos, there is one casino that predates Zhao’s arrival. An earlier development, called Golden Boten City, tried to tap the Chinese gambling market from a far more convenient location than Kings Romans. In Boten, Chinese customers could simply walk over the border from Yunnan Province, and since it was also located in a special economic zone, they did not need visas. For a 
while, Boten was wildly successful, with thousands of visitors daily. Then, things started to unravel. Gamblers reported being locked in their rooms until they could pay their debts. Rumors of beatings and even murders circulated. Locals said they had seen dead bodies floating in the river behind the casino. Finally, in March 2011, China shut down the border and cut off electricity. This is a fate that Zhao would like to avoid. 
 
* * *

Despite Zhao’s insistence that the drug trade does not affect what he does in Laos, the spot where the shooting took place can be seen from the Kings Romans river dock. It turned out to be the work of rogue members of the Thai border guard who, everyone suspects, are in the pockets of local drug lords. And when the Chinese media started running stories on the incident, it didn’t take long for Zhao’s name to come up. 
 
Some reporters speculated that it was another strike by Naw Kham. Others suggested that the problem is upriver from the Golden Triangle resort, another jungle-bound casino on the Burmese side of the border. The Golden Triangle is not quite as flashy as Kings Romans, but according to Chinese media, this casino is run by a former drug lord. Zhao’s arrival, they say, shook up the accepted hierarchy in the area.
 
This is the only topic that causes Zhao’s calm to crack. In addition to the stories about the shooting, he has been accused of smuggling timber and drugs from his ports. One Burmese newspaper, the Shan Herald, reported last September that there had been a drug bust inside the casino. “People are saying everyone here has drugs,” Zhao says in response. “They don’t know  what they’re talking about. The casino offers people an alternative to working in the drug trade. We are 100 percent clean.” 
 
Zhao insists his intentions in Laos are good. His goal, he says, is to be here for a long time. But it is hard to see how he will do it without at least reaching an agreement with local drug runners. In one report in the Chinese magazine The Southern Weekly, an intelligence officer comments, “If he doesn’t get the Thai garrison to approve, there’s no way they can keep operating.” The  garrison, of course, is assumed to be in the pocket of Naw Kham. 
 
Zhao has worked under difficult conditions before. He has even worked in the jungle before. The Laotian casino, however, has turned out to be more than he bargained for. 
 
“I have almost left on a number of occasions,” he says. “But I’ve made a commitment to this place.” 
 
The Chinese army started patrolling the area in early December, which will help. And Zhao is anxious to talk about his projects in the SEZ. “We want to expand it so it’s like Las Vegas in the U.S.” He has already started up a few vegetable farms, which service the casino for now, and he has visions of exports. He insists I go see the flock of geese he is keeping at the edge of one of the lakes in his jurisdiction, and asks if I have any other ideas to help attract travelers. “Some people here can care for the vegetables, some people can drive cars. Everyone can have work that fits their age and abilities if they want it,” Zhao says. “We are improving people’s lives by improving the economy. 
 
“We have to be responsible to Laos and we have to be responsible to history.” 
 
* * *

 
Today, the easiest and safest way for a tourist to get to the Golden Triangle is through Thailand. There are boats from China, but drug trafficking has made people wary of the route, and the shooting caused the number of Chinese gamblers coming down the river to drop precipitously. Now, most people come through Chiang Rai, funneled through the single airstrip of Thailand’s northernmost airport. Zhao would eventually like to build his own airport in Laos, but for now he has to settle for this. 
 
The Mekong is about a 60-kilometer drive from the airport, and Kings Romans has invested in a fleet of gray vans to ferry people back and forth. The day I arrive, I share my van with a tourism consultant from Hong Kong named Cai. He is casually dressed, his hair in a slight bouffant, and his presence is a potent indicator of the scope of Zhao’s ambition. Cai tells me about plans to take the casino public. “They want to make sure they’re doing everything right,” Cai says. “I think you’d say ‘by the book.’” It will take time. They’ll have to bring the casino up to international standards. They will have to educate all the employees about money laundering and other kinds of crime. Cai is chatting steadily about the casino’s future when he interrupts himself with a serious question. “Weren’t you scared to come here?” he asks me, then answers his own question: “I was very worried about it at first. They said it was safe, but it’s the Golden Triangle.” 
 
The moment you hit the river on the road from Chiang Rai, you see the casino’s crown on the opposite bank. To get across, we clamber out of the van, walk down to the riverbank along wide steps, and board a Kings Romans speedboat. On the other side, a bald Chinese man stands waiting for us, dressed in Air Jordans and a button-down shirt. When we disembark, he presents a choice of luxury vehicles to take us through to the casino. We opt for a Hummer. 
 
Our new chaperone is Wenxin Zheng, the vice president of Kings Romans Group. He was recruited from an investment fund in Beijing a year and a half ago and acts as Zhao’s gatekeeper. He is by far the most cautious person at the casino. Earlier, when I submitted a written interview request, Zheng called me, sounding sheepish. “We don’t want to talk much about our casino,” he told me. “But we would love to invite you to interview us about our tourist retreat.” 
 
No matter what Zheng says, it’s clear right off the bat that the casino is the heart of the operation. It’s flanked with statues that one of the Chinese tour guides tells me are Roman gods. “I’m not sure which gods,” he says. “But I’m pretty sure they’re gods.” 
 
The entrance of the hotel faces the parking lot and beyond it, the river. Zheng assures me that there is no drinking or prostitution in the casino, but on the north side of the hotel I spot a shabby pink building with a row of dubious-looking massage parlors on the ground floor, and on the second level a bar whose windows have been blacked out by giant posters of pole-dancing ladies. A tall woman in short shorts stands outside one of the storefronts, sipping a Coke. 
 
Zheng has no intention, however, of showing me any of this. He wants to show me Zhao’s good works. “All his life, he wanted to do something big like this,” says Zheng. “This is his dream, to leave behind something good.” 
 
Zhao is getting old, Zheng continues. He has enough money to retire and play golf every day. But in Laos he means to make a lasting impact. He wants to be remembered for what he does here. There’s no avoiding the fact that Zhao is an opportunist, but in Laos he is an opportunist with vision.  
 
The first stop on Zheng’s tour is a shantytown where a group of Burmese laborers live. Most of them came to the special economic zone to find jobs in construction. They are helping to finish a road and build a spa down the street. “A friend of mine told me that European tourists might like to come here and take pictures,” says Zheng, pointing to a water trough where men in underwear are washing up.   
 
The Burmese, he says, didn’t want to stay in the dorms that Kings Romans built. Except for a few private rooms, the dorms are separated by gender, and the Burmese didn’t always like living six to a room. So they built a temporary network of wooden huts. “We let people live how they want here,” Zheng says. He points out a makeshift church and a bar. One hut has a display of packaged food. “They have a supermarket!” he announces proudly. Zheng says the group plans to build more permanent housing for the Burmese in the new year, but they will, he repeats, always be free to choose. 
 
In addition to establishing Kings Romans, Zhao is doing his best to attract other investors to diversify the area. Smaller entrepreneurs are welcome to come open shops and restaurants in a handful of open-air buildings built by Kings Romans. The largest market is split in half; on one end, Thai workers sell entirely Thai-made goods, while the other end is entirely Chinese. “The Thai side does better business,” Zheng admits. 
 
For these proprietors, the special economic zone provides water and electricity, and Zhao is insistent that they charge no taxes. “The only thing we ask is that they don’t inflate the prices of the stuff they sell so that they’re more expensive here than in Thailand or China,” Zheng says. He shows me the dorms where casino workers and laborers live. If you marry, he says, or if you find that dorm life is impeding your efforts at finding someone to marry, you can apply for a private room. 
 
At the dorms, Zheng stumbles over a more practical reason for the nice facilities and for Zhao’s abundant generosity. In the year and a half that Zheng has worked in Laos, his wife has rarely come to visit, despite his having a private room within the dorm complex. “It is really difficult to get good people to come here from China. Sometimes they hear what it’s like—that Zhao lives with the workers—and they’ll change their minds.” 
 
* * *
On my final day at the special economic zone, Zheng has arranged for me to drive around the entire 100 square kilometers with the deputy director of the Golden Triangle SEZ office, Tingyan Huang, who came here from Yunnan Province. Huang takes me to a farm, where he says Zhao brought in Chinese agricultural experts to give advice to the locals. He takes me to see Zhao’s geese and to an island a short drive away from the casino that is popular with tourists. They boat over from Thailand to buy cheap souvenirs. We take a ride in a motorboat and buzz by the casino on the Burmese side. 
 
In the afternoon, Huang offers to take me to some of the other attractions that Zheng has mentioned are part of the tourist retreat, including horseback riding and a racetrack. The tour is apparently not important enough to merit one of the Hummers, so Huang pulls around in a smaller suv. We drive off the pavement onto a dirt road and bump along until we come to a circle of flags stuck in uneven, overgrown ground. Three ponies with knotted manes stand around, stamping their feet, eating grass, looking unlikely to muster the energy to slalom the flags. Huang looks out the window doubtfully. “Do you want to get out?” 
 
I’ve seen a sign for a zoo, so Huang stops there as well. It’s a grim line of enclosures that includes some deer, peacocks, a few monkeys, and around 10 bears that look like they’ve passed out drunk. Huang stuffs his hands in his pockets and lingers outside the bear enclosure for a little while. Finally, he nods and says, “Bears.” After a pause, he asks, “Well, do you want to go back to the casino?” 
 
Later, over a glass of wine, one of the consultants laments these secondary attractions of the Golden Triangle Special Economic Zone. “It’s clear that what they’re best at is the casino,” he says. “If you want to stay for more than one day, and you are a regular person, you can’t spend all your time in the casino. We’re going to bring a tourism consultant to see if they can’t set up something better.” 
 
Huang is not entirely convinced of Zhao’s vision of paradise on the Mekong. It has drug trafficking to overcome, more gamblers to attract, and investors to woo. Plus, he says, it’s hot in Laos. Huang doesn’t speak Laotian and he only leaves the casino on organized shopping trips into Thailand. Chiang Rai, he tells me, has a KFC. Despite all this, he is happy he came to the Golden Triangle, mainly, he says, because he is in love with the Chinese receptionist in the SEZ's immigration building. They’re going to get married sometime soon, although Huang doesn’t think they’ll apply to move out of the dorms. 
 
When he was recruited from China’s Yunnan Province a year ago, Huang almost didn’t accept the offer—the whole thing sounded a little dangerous—but the pay was good and, he says, he’s more adventurous than an average Chinese. Now, aside from the heat, he claims the biggest drawback to working at the Golden Triangle SEZ is that it’s boring. There isn’t much to do besides gamble. And employees, he says, aren’t allowed to gamble. “It’s a good policy,” he says. “Otherwise everyone would lose all the money they made.”     
 
 
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