Macau – A Paradise for Casinos and Players Alike
If you are a seasoned player or someone working in the sphere of gambling, there’s no way you’ve never heard of Macau. “The Last Vegas of the East”, as it is endearingly referred as, actually makes six times the revenue that Las Vegas does.
Macau is an administrative region of the People’s Republic of China. This special status allows it to maintain separate economic and governing systems to that of mainland China.
Due to the unique arrangements, Macau was able to create a so-called haven for gambling companies and enthusiasts. It currently has the largest gaming industry in the world and gambling contributes the most towards Macau’s $53.9 billion GDP. This number is spectacular when you account for the fact that Macau only has 682,800 citizens.
Despite the prosperity that gambling brought to Macau, its gambling industry might experience changes. China has recently criticized Macau’s gambling operations and many people fears that the criticism would translate to harsh regulations that can forever change Macau.
Macau and China
Let us give you some information as to why everyone is concerned about the future of Macau and its status as the top gambling venue of the world. Although Macau has some of the most relaxed laws concerning gambling, it still requires valid operating licenses issued by their gaming authority.
The current licenses are set to expire in March 2022. This means that now is the time to make changes if any are to be made, and China seems to think there should be such. Lately, Chinese authorities have been regulating various businesses, but what’s concerning is that they have set their eyes on Macau this time.
As we previously mentioned, Macau has a special status, which allows it some grade of autonomy, and thus, China is seen as overstepping the boundaries. However, as we learnt with the failure of the “Free Hong Kong” initiative, China can overstep the boundaries that it had set for administrative regions in the past.
Mainland China is critical of Macau’s way of governing and doesn’t like the fact that its economy is so intimately tied to gambling. Gambling is in fact illegal in China, so their dislike is natural. Chinese Authorities want to change the face of Macau, but it might be hard considering 70 to 80% of Macau’s GDP comes from gambling and that Macau itself is the size of Manhattan.
However, let us cut China some slack here. There are legitimate reasons why relying solely on gambling can be bad. For instance, many locals choose to drop out of university to pursue career in the casino industry, which means there would be fewer other professionals in the future.
Moreover, many stores and restaurants have closed down because they can’t compete with the lucrative salaries that casinos offer. In addition, casino resorts in the city only generate profit from the casinos and not from their hotels as most tourists are day-trippers who rarely go there for anything but gambling.
There is also the issue of crime. Crime has skyrocketed in Macau for the last 20 years, during which Macau became the gambling capital of the world. This is in part for the casinos themselves, but also because the wealth gap has widened for this period. Despite the high GDP per capita, poverty is not a thing of the past in Macau.
Recent Developments
Now that we have established various factors relating to gambling in Macau, let us explore the recent developments in the saga that kickstarted the campaign to change the Las Vegas of the East.
The main sign of trouble came when Alvin Chau was arrested in November 2021. Chau is the chairman of Suncity Group Holdings, a company offering casino tours to wealthy Asian clients. He is charged with fraud and money laundering on the accusation that he operated a cross-border syndicate that lured Chinese people into gambling in Macau, thus acting as a loophole to the ban on gambling in China.
Suncity Group shares were immediately pulled of the stock market. Chau’s arrest, however, also affected the stocks of the five operators in Macau, and they’ve been plummeting ever since.
In response to the scandal, Macau’s secretary for economy and finance, Lei Wai Nong, said that the city is looking into ways to better regulate the industry. A few days later, it was announced that casinos would be no longer allowed to offer big credits to VIP clients from China in a bid to curb Chinese interest in Macau.
Final Thoughts
It seems like Macau is indeed heading towards more regulations, but this isn’t necessarily bad. While some bad prophets are calling the changes the end of Macau, it could actually be the beginning of a new era where gambling is highly available but not on the price of every other industry failing.
