Taiwan’s offshore Penghu County will vote on October 15 to decide whether to permit casino development in the archipelago also known as the Pescadores. It marks the second time Penghu has gone to the polls on the casino question, having rejected a similar measure in 2009. That was the year Taiwan’s legislature gave offshore areas like Penghu the right to choose to host casinos. Las Vegas Sands founder Sheldon Adelson, who says he’s looking for new opportunities in Asia after opening Parisian Macao, dismisses Penghu as “a place with lots of wind.” Moreover, lawmakers in Taipei have stalled for seven years on the next legislative step for casino legalization, and the ruling Democratic Progressive Party remains opposed to casinos. None of these obstacles seemingly dent the confidence of Taiwan’s casino boosters, who believe that now is the time, Penghu is the place and even, perhaps, that Donald Trump will make Penghu great again.
Casino legalization would add more bright lights to Taiwan’s Penghu. But a yes vote will just send the question back over the water to Taipei. (Photo credit: Shuttlestock)
Penghu, far closer to Taiwan than mainland China, was the first to reject to casinos, but it won’t be the first to approve them. The 2009 Offshore Islands Development Act gave six areas outside Taiwan’s main island coast the option to hold a local plebiscite to allow casinos. That bill was the result of a two decades long effort for casino legalization in Taiwan, with proponents still hoping someday to put casinos on the main island. Three offshore areas attracted interest as potential casino sites, Penghu, Kinmen and Matsu, the latter two small islands that are a short ferry ride from mainland China.
In 2012, Matsu voted yes in a casino referendum. The local government actively supported the pro side. So did Global Gaming Asset Management (GGAM), founder by William Weidner, ousted in 2009 as Adelson’s top lieutenant at Las Vegas Sands. GGAM promised a US$8 billion integrated resort project for small, mountainous Matsu, including US$2.5 billion to improve the airport and other infrastructure. Mainland China would be the primary market for a Matsu IR, trying to take business from Macau and capitalizing on Matsu’s location, as little as 20 minutes by ferry from the mainland.
The current law only allows islands to vote for casinos, not to open them. Taiwan’s Legislative Yuan still must pass another bill to legalize casinos. After the Matsu vote, a Tourism Casino Administration Act was drafted, but it’s remained stuck in the legislature since 2013. Disincentives for passage of this enabling legislation include repeated declarations by mainland officials that they won’t allow Chinese citizens to visit Taiwan strictly for gambling, undermining the commercial case of Matsu. That underscores the importance of the Penghu vote.
“Penghu is a different play than Matsu or Kinmen, as it would depend less on mainland Chinese customers,” Bill Bryson, a US lawyer practicing in Taipei and New York for more than 25 years, explains. “Foreign casino operators saw potential in Penghu long before mainland Chinese tourists started coming to Taiwan in the numbers that they do now.” Taiwan’s 23 million people plus Japanese, currently visiting Penghu for its scenery, beaches and watersports, would be Penghu’s casino target market. Mainland visitors could visit as part of a longer Taiwan stay.
Unlike 2009, local government actively supports a yes vote, even though it’s controlled by DPP, as do local business groups. A source suggests Donald Trump’s team could be interested in a Penghu casino resort; the Trump Group couldn’t be reached for comment. Bryson says the draft legislation addresses issues such as taxes and problem gambling that raised pubic concerns in 2009. So the outlook is more positive this time around. Results are promised by October 22.
“If the Penghu referendum passes, it may be the impetus necessary for the legislature to pass the casino gaming legislation that was submitted to the legislature three years ago, though this is by no means guaranteed,” Bryson, a senior advisor with Global Market Advisors, says. “If the Penghu referendum does not pass, there is little chance that the legislation will pass in the near future.”