There was an appealing grit to the old Macau. Its Chinese citizens were entrepreneurs who had struggled and finally found a kind of peace without politics. They did business with Communist trading companies and European buyers, played mah-jongg on card tables outside their houses, and ate Portuguese milk custards. These were real people living real lives.

But today, Macau is being transformed into China's sparkling new Sin City. Since regaining the territory in 1999, Beijing has decided to turn the town into the gambling capital of the world, an experimental proletarian playground at the southern edge of a country where unfettered, often ruthless capitalism still pretends to be communism. (In "Communist" China, the emperor truly has no clothes!) The government canceled the gambling monopoly controlled since 1970 by Stanley Ho, a mercurial Hong Kong tycoon whose ratty casinos contributed some seventy-five percent of Macau's revenues. Instead, Macau handed out three new licenses, to Ho and two Vegas kingpins: Sheldon Adelson of the Las Vegas Sands Inc., which owns the Venetian, and Steve Wynn, who brought the world Vegas's Bellagio. The building spree began.

The Chinese are gambling fanatics. Gaming may, in fact, have originated in China: There are records of betting games there dating back as far as the Xia dynasty in 2000 b.c. One Chinese historian attributes his country's gambling obsession to the traditional imperial system, which made social mobility difficult and encouraged the idea of getting rich overnight. During the Tang dynasty, which began in the seventh century a.d., gaming—often controlled by secret societies, or "black societies"—became so excessive that the rulers worried it would lead to social disorder. By the time of the twentieth-century Communist revolution, horse racing, baccarat, and lotteries had proliferated, run by powerful gangsters in colonial port cities like Shanghai, contributing to a sense of moral decay. Chairman Mao outlawed gambling, and it disappeared from mainland China for almost half a century. Today, gaming is still illegal on the mainland, although the clattering of mah-jongg tiles can be heard everywhere, and illicit lotteries—by some estimates an almost $10 billion business—have sprouted up.

Beijing's bet on Macau is paying off big-time. When the $240 million Sands Macau opened in 2004, a stampede erupted as some fifteen thousand people rushed to get in, tearing plate-glass doors off their hinges. The Venetian opened last year, and in one day alone, more than 100,000 visitors passed through. In 2007, gambling revenues at the Venetian, the Wynn, the Crown, the Grand Lisboa, and the other casinos surpassed those of Las Vegas by more than $3 billion dollars—$10.3 billion compared with $6.8 billion. That's only the beginning of a plan to build 23 more hotels and casinos in the next ten years—increasing the 16,148 hotel rooms of today to 60,000. "And that still will not be enough," João Manuel Costa Antunes, director of Macau's tourism office, tells me one afternoon, shrugging off my question about what will become of the charming old Macau as Vegas moves in. In 2007, 27 million tourists visited Macau—ninety percent of them Chinese—compared with an average of only 7 million before Macau's return to Chinese sovereignty. According to the China Institute of City Competitiveness, Macau is China's fastest-growing city—and in a country where entire cities are being rebuilt practically overnight, that's saying something.