Macau’s Slow Sink

Macau has become the synonym of luxury casinos in China, but revenues aren’t looking all that good…

The only location in China where people can gamble, Macau has quickly gained – and kept – its vogue status in the gaming community. Poker winners enjoy the exotic city that has been the subject of praising gambling news for a long while now. But, storm clouds are looming towards the city; gaming income is gradually decreasing. There are numerous reasons behind this plunge in income and most of them are thanks to new government laws. This, however, didn’t stop developers in Macau from building a USD 3 billion casino… maybe with the hidden agenda to draw back lost visitors with the power of novelty.

Are Macau’s glory days really up? According to the Statista, it had its best years between 2007 and 2013; the city’s gross revenue went from USD 10.5 billion in 2007 to its highest peak in 2013, when it reached USD 45.27 billion. From then on, however, things started going downhill. Already in 2014, gross income from gambling decreased to USD 44.16 billion. Business insider says that there are a vast array of elements that contribute to this plunge, even though Macau is the only region in China where gambling is legal. Chinese gamblers virtually adored this region. Now, it is hard to understand why less people visit the city, its urban-exotic charm is unlike any known gambling destination in the world.

Much bigger than Vegas, yet struggling to keep tourists

Macau poker rooms don’t seem to be enough anymore to seduce visitors into coming to the city. According to CNN, Macau’s casino industry is seven times bigger than that of Las Vegas, and yet, revenues are still plummeting. Why could that be? Macau provides something totally different than Vegas… As with everything, it is imperative to look behind the scenes and find out why this might be happening. Why are gamblers suddenly turning away from the Chinese gambling Mecca? It is special, alluring and was insanely popular… It is no coincidence that even the largest casino complex in the world, The Venetian, is located there. So what happened?

Legislation happened. More specifically, Beijing’s anti-corruption laws. CNN reports that the Chinese government has tightened surveillance to find any suspicious money-activity. Because of this, players who tend to spend oodles of money at the card table or on slots, find somewhere else to go. Also due to stricter rules, visas aren’t as easy to obtain anymore as they used to be. To make matters worse, the administration posed a ban on smoking in Macau’s casinos, which further enraged visitors. Somehow, as a result of these laws and prohibitions, Macau lost its mystical charm and visitors turn to other cities.

No diversity, huge risk

There is cause for concern and plenty of it, because as CNN states, “Despite continued warnings, the territory has failed to diversify its economy beyond gambling, leaving it heavily exposed to the risk of an industry downturn.” Moreover, mobile casinos are gaining popularity fast, which makes it possible for people to play at home, lying on the couch. Thankfully for Macau, there are some individuals who realized that there is a massive problem with Macau’s revenues leaning on only one source, so they quickly started to draw up plans on diversifying the sources of entertainment.

Shopping centres, expanded hotels and theatres are of the menu to make Macau more appealing for tourists. After all, Macau’s livelihood depends on it. Especially since there are new locations emerging on the gambling scene: Cambodia, the Philippines and Vietnam are all throwing in everything to captivate Chinese gamblers. Fortunately, all might not be lost at Macau; the analysts of Fitch Ratings told the CNN that “While the recent operating declines are concerning we are encouraged by the fact that the long-term fundamentals for the higher-margin, lower-volatility mass business remain intact.” So, Macau’s revenues might just recover towards the end of this year… we certainly hope so!