You don’t have to be into gambling to know that Macau is China’s version of Las Vegas. But this vague comparison doesn’t actually begin to cover the scale of what is going on int Macaru from a gambling perspective. This former Portuguese colony is well ahead of Sin City as the world’s casino capital with gambling revenue exceeding the entire state of Nevada. But how did this happen? And what lessons can be drawn from this story. Find out the answers to all these questions in the article we prepared.
Globalization and the Rise of China
Those are the words that pretty much sum up the unbelievable story of Macau. The globalization part comes from the role played by all the foreign casino companies that put their shoulder into making all this happen. The rise of China end of things is covered by the fact that the wellbeing of this nation has contributed greatly to the success of Macau.
1999 is the year when Macau returned to Chinese rule as a specially-administrated area. This means it can have different laws compared to the mainland. And when we say different, we really mean it. As this is the only territory in Greater China – that includes Hong Kong, China, and Macau – where gambling is legal. Before 1999, gambling was still present in Macau. However, it was intertwined with organized crime and sub-contracted VIP rooms that gave a different dynamic to the entire scenario. Even so, these factors contributed to shaping Macau’s unique gambling experience it offers today.
It’s exactly their focus on high-rollers that get private rooms and a never-ending list of privileges that fuels the success of Macau’s casinos. The VIP rooms we mentioned earlier were the cornerstones of presents casinos, and even today, the high profile players make up to 66% of the entire casino revenues in the area.
Even though things were already looking good enough, with gambling taxes amounting to 40% of all revenue collected by the authorities of Macau, the authorities played it smart and managed to take that number to 81% by opening up the industry and allowing international gambling companies to apply for a license.
If up until 2001, Sociedade de Turismo e Diversoes de Macau was the only company allowed to operate in the area, things rapidly changed and firms from all around the world started to apply for a license. Australia, Hong Kong, the United States, all the big players in gambling have their representatives there with big flashy names like the MGM, Wynn Resorts or Las Vegas Sands.
All these companies invested heavily in huge casino resorts, with hotels and shopping malls that helped boost the economy, offered a lot of jobs and driving a lot of tourism towards Macau. The phenomenon got so big that the development of Macau included six square kilometers of new land that connects Coloane and Taipa islands to make room for new casino resorts.
So, it’s no surprise that by 2014, the gaming tax revenue represented 84% of the total revenue of Macau. This win-win situation, however, didn’t last too long because China’s president Xi Jinping initiated a widespread anti-corruption cleanse and Macau and the casinos were specifically targeted.
The Apparent Decline of Gambling in Macau
With China’s fight against corruption taking place, the VIP gaming rooms where wealthy Chinese citizens were gambling and having fun were seen as an important leakage of capital that should’ve gone to the Chinese economy. So, to avoid scrutiny, some of the Chinese elites decided to stay away from Macau, leading to a fall to 79% of total tax revenue in 2017.
Even so, the industry always finds a way and looks seem to be stable now. With a slight shift towards mass-market entertainment and even hosting big events just like Las Vegas does, Macau plans to make its next big step.
Also, the bridge that connects Hong Kong with Macau should improve the flow of tourists towards Macau. And, even though during the anti-corruption campaign meant some gamblers decided to go with neighboring casino destinations like Singapore or Manila, the ever-growing Chinese middle class should provide a constant flow of tourists and casino aficionados for the years to come. This can possibly be attributed to an increase in the traffic of casino and betting sites like Sportsbet, who have seen an influx of users from these destinations over the past few months.
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