LAS VEGAS - Most people still think the U.S. gambling industry is anchored in Las Vegas, with its booming Strip and 24/7 action, a place where years of alluring marketing campaigns have helped scrub away the taint of past corruption.
In just a decade, however, the center of gambling has migrated to the other side of the world, settling in a tiny Chinese territory an hour's ferry ride from Hong Kong. The gambling mecca of Macau now handles more wagers than all U.S.-based commercial casinos put together, and many of those bets end up swelling the balance sheets of U.S. corporations.
But as U.S. gambling companies have remade Macau, Macau has also remade them.
Chasing riches, these companies have been hit with allegations of improper conduct, prompting investigations and serious questions about how closely U.S. authorities are watching the corporations' overseas dealings, and what, if any, real repercussions they could face. Could these corruption claims revive the specter of gambling's bad old days, when Sin City casinos kept mobsters flush?
"There are some countries where you either have to pay to play and break the law, or you have to not do business there," casino consultant Steve Norton said. "I think the jury's still out on Macau."
Macau is the only place in China where gambling is legal. Each month, 2.5 million tourists flood the glitzy boomtown, most nouveau-riche Chinese who sip tea and chain-smoke as they play at baccarat.
The former Portuguese colony has long been known for its gambling but used to offer a seedier experience, with small-time gambling dens crowding up against textile factories and gangs, prostitutes and money-launderers operating openly. That was the scene in 1999 when China assumed sovereignty of Macau and opened it to outside gambling operators.
"It was a swamp," said Sheldon Adelson, CEO of Las Vegas Sands, as he looked back on his early venture in an obscure city where Chinese officials envisioned resorts. "Everybody thought that I was crazy."
Nevertheless, he and the two American competitors that tried their luck there succeeded spectacularly. Now operating four booming casinos in Macau, Adelson described Sands as "an Asian company" with a presence in America. He makes far more in China than in Las Vegas.
"This industry is supply-driven, like the movie 'Field of Dreams:' Build it and they will come." he said. "I believe that."
If Adelson's words and jack-o'-lantern smile suggest all is right in the globalized casino world, consider where he made these statements - on the witness stand in a Vegas courtroom this spring, defending his company against one of his former Macau consultants.
A jury in May found against Adelson, awarding the consultant $70 million for helping Sands secure a lucrative gambling license in Macau. Sands immediately appealed.
The company is also accused of making improper payments to a Macau lawmaker and collaborating with the Chinese mafia. The U.S. Department of Justice and the U.S. Securities and Exchange Commission are investigating. Sands says it's done nothing wrong.
It's not just Sands facing legal and regulatory troubles connected with Macau. Two of the other three major U.S. gambling enterprises are, too: Wynn Resorts Ltd. and MGM Resorts International. Both Sands and Wynn are facing related lawsuits from shareholders who claim Macau mismanagement has damaged the companies.
• Wynn is being investigated by the Justice Department and the SEC over a $135 million donation to the University of Macau Development Foundation in 2011. Wynn co-founder Kazuo Okada characterized the donation as "suspicious" in a 2012 letter to the SEC. He noted that the Development Foundation's lead trustee is also a member of the Macau government, and said that the donation coincided with Wynn's request for land to develop a third casino.
"I am at a complete loss as to the business justification for the donation, other than that it was an attempt to curry favor with those that have ultimate authority for issuing gaming licenses," said Okada, who is now under Department of Justice investigation himself for possible bribery in the Philippines. Okada denies wrongdoing.
If his claim is true, the Wynn payment could violate the Foreign Corrupt Practices Act, or FCPA - a law that bars U.S. companies from paying off officials to win business overseas. Wynn says it acted properly and had no need to buy off authorities. Nevada regulators, in a separate investigation, found no wrongdoing.
• MGM got into trouble with New Jersey regulators when the company opened a Macau casino with Pansy Ho, the daughter of a gambling kingpin allegedly linked to Chinese gangs. The state found the partnership "unsuitable" in a 2010 report, and forced MGM to sell its stake in an Atlantic City casino. MGM denied that there was anything inappropriate about the relationship.
Two years later, MGM CEO Jim Murren says: "The Macau market is now larger than the entire U.S. gaming market."
Last winter, New Jersey agreed to consider MGM's application for a renewed license.
• The Sands inquiries stem from a pending wrongful termination case brought by former Sands executive Steve Jacobs in 2010. Jacobs claims that Sands' China subsidiary did business with known gangsters, tacitly condoned prostitution and made inappropriate payments to an attorney who was also a Macau lawmaker. Jacobs claims Sands paid the lawmaker to help settle various regulatory issues in Sands' favor.
Sands has denied all claims, but recently said in an SEC filing that an internal audit had found possible breaches of a section of the FCPA that requires public companies to file proper financial statements and maintain a system of internal controls.