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Macau's Portuguese colonial rulers legalized the city's first gambling house in 1847. But judging by the public reaction to the May 18 opening of the flashy Sands Macau casino, you would think the Macanese had just discovered sin. Encouraged by false rumors that the Sands planned to hand out free gambling chips, hundreds of people lined up in the early-morning hours hoping to get first crack at the baccarat, poker and blackjack tables. By the time the casino was opened to the public at 3 p.m., more than 15,000 had gathered in a pulsating scrum, ready to rush the lobby. Three sturdy plate-glass doors were ripped from their hinges and several little old ladies were nearly trampled in the ensuing stampede before police restored order by forcing stragglers back to the main street. As night fell, hundreds who failed to get in during the first wave disconsolately waited outside behind police barricades for a chance to place their bets.

Their time will come. The opening of the Sands Macau, a $240 million waterfront pleasure dome, offers Asia its first taste of Las Vegas glitz, and the casino will soon be followed by others like it. In 2002 the local government ended a 40-year monopoly on the gambling business, permitting two of Vegas' biggest gaming magnates to open up shop. The economic boom that has ensued is loud even by Chinese standards. While nearby Hong Kong's economy, with a total population 15 times the size of Macau's 450,000, grew just 3.3% during a SARS-marred 2003, Macau's gross domestic product exploded by 15.6%. Meanwhile, more than $3 billion of investment in casino and resort projects is in the pipeline. "Macau is just on fire," says Marc Falcone, a New York City-based gaming analyst for Deutsche Bank.

The sleazy, sleepy city is certainly in transition. Before Portugal handed Macau back to China in 1999, its architecturally charming but rundown streets were lined with hookers and occasionally reverberated with gunfire and car bombings from triad gang battles. The gambling business—which contributes 75% of Macau's government's revenue and supports the city's only major industry, tourism—has been the exclusive province of Stanley Ho, an elusive 82-year-old casino-and-property tycoon. His company, Sociedade de Turismo e Diversões de Macau (STDM), has not kept gaming operations in step with the times. The Lisboa hotel and casino, the flagship of 12 Macau gambling houses owned and operated by Ho, opened in 1970, and years of hard use are reflected in the venue's shopworn carpets and smoky, musty atmosphere. "The old casinos are just all tables for you to gamble," says Gigi Santos, a Filipina living in Macau.

Now, Sheldon Adelson and Steve Wynn, two formidable American entrepreneurs, aim to transform Macau into a first-class tourist destination for millions of Asians, mainland Chinese in particular. Adelson and Wynn are credited with reviving Las Vegas' flagging fortunes in the 1990s by building a succession of spectacular complexes that combine hotels, entertainment and gambling facilities, among them the posh Venetian (Adelson's best-known resort) and the Mirage (a project by Wynn). Today, with separate gaming licenses from the Macau government, the pair are racing to duplicate their U.S. success. Adelson, 72, built the Sands Macau, so he is first out of the blocks. But he says the Sands is just his ante. He plans to line up investors for a strip of 20 3,000-room hotel-casinos, costing, he estimates, $12 billion, including a $1 billion re-creation of the Venetian due to break ground in June. "I see an Asian Las Vegas" sprouting in Macau, says Adelson.

Those who attended the Sands opening enjoyed a similar vision. Inside the front door, showgirls in pink, sequined bikinis and multicolored feathers pranced and greeted visitors. Towering above the busy slot machines, a 33-m-wide video screen flashed fireworks and ocean sunsets. Waiters in traditional Chinese peasant hats scurried between the tables with free cups of tea. A jazz band jammed at the casino bar. At the "888 Las Vegas Buffet," gamblers stuffed themselves silly with all-you-can-eat sushi, pasta and Indian curries for $17 a head—a bargain by local standards. Behind wooden doors, big spenders, or "whales" in Vegas lingo, enjoyed quiet VIP rooms with plush maroon chairs and lofty windows where minimum bets can reach $130. Still to come: 51 luxury suites, some with a mansion-size 740 sq m of floor space, featuring saunas, karaoke rooms, private plunge pools and Jacuzzis with views of the harbor.

Adelson and Wynn point out they are adapting their winning formulas to suit Asians. For example, the Sands has gaming tables for fan tan and other games preferred by Chinese. A jackpot combination on specially adapted slot machines is the locally auspicious "888" instead of the traditional triple seven that wins big in the U.S. But no matter how Asian-friendly, gambling alone won't be enough to fill thousands of new hotel rooms. "Right now, Macau is for the gambler, period," says Wynn, who is planning to break ground on a $550 million hotel-casino he calls "the most ambitious in the Pacific Rim" later this year. "The trick is to add other dimensions to the town, open the door to people who haven't been going to Macau."

Is all this frenetic construction just a gamble that a whale might make? Adelson doesn't think so. "Risks? I don't think there are any," he says. And he might be right. Half of the world's population lives less than a six-hour flight away from Macau. The city has always attracted gamblers from Hong Kong and a few high rollers from mainland China. Beijing is now allowing more Chinese to visit Macau independently instead of in tightly controlled tour groups. A surge is under way—the number of mainland tourists to the former colony nearly doubled between 2000 and 2003. Last year, gaming revenues at Macau's 12 casinos increased 27% to $3.8 billion. Compare that with Vegas, where the 22 major casinos saw a mere 2.4% increase to $4.7 billion last year. Each table in Macau pulls in $22,100 a day compared with the $2,200 Vegas average.

The only person who seems likely to lose out in the new Macau is former monopolist Ho. "Stanley Ho is going to have to change his thinking," warns Adelson. Maybe. But Ho's daughter, Pansy Ho, an STDM director, is negotiating with MGM Mirage, the world's biggest casino operator, for a possible alliance. Ho is building a second, $250 million Lisboa across the street from the original. And he is also constructing a $140 million amusement park called Fisherman's Wharf, set to open later this year on a pier jutting into Macau's harbor. "We want to show Chinese tourists a place that's more family-style," says Ho's business partner, Macau-based property developer David Chow.

Last week, Ho didn't act very concerned. He stopped by the Sands' opening, grinning broadly while meeting his new competitors. "We have the opportunity to learn from one another," Ho told reporters. "The cake is going to be bigger and bigger and we all could have a share." Viva that, Las Vegas.

• Michael Schuman | Macau
• The crowds at the city's first Las Vegas-style casino herald a whole new era