Monte Carlo of the Orient, Las Vegas of the East – whatever the nickname, for more than a decade Macau has become the gambling capital of the world.
It earned the right to call itself the leader of global gambling in 2007 when the special administrative region of China overtook Las Vegas in annual gambling revenues.
So, how did this tiny peninsula in south China become a giant gaming force, and more importantly, how does its future look in light of the coronavirus pandemic?
A brief history
Gambling has been in existence in Macau since the 1850s when it was a territory under Portuguese rule. Up until the 1960s, the more than 200 gambling houses offered only Chinese-style gambling games.
That changed when, in 1962, the government awarded the monopoly gambling rights in Macau to the Sociedade de Turismo e Diversões de Macau (STDM) – a syndicate of Macau and Hong Kong businessmen.
The STDM revolutionized the Macau gambling landscape by introducing Western casino games and improving the region’s transport links and infrastructure, allowing for the arrival of millions of visitors from China and Hong Kong.
Macau was the last Portuguese bastion in Asia, and they held sovereignty over it up to 1999, when China agreed to take charge of the territory as an autonomous region (similar status as Hong Kong).
Especially due to this transition, the STDM’s monopoly ended in 2002. Then, the Macau government granted licenses to six casino operators: Sociedade de Jogos de Macau (which is 80% owned by a subsidiary of STDM), Las Vegas Sands, Wynn Resorts, Galaxy Entertainment Group, a partnership between Melco and PBL, and a parternship between MGM Mirage and Pansy Ho Chiu-king.
Just five years after the end of casino monopolization, Macau became the most lucrative market in the gaming industry.
As of 2019, there are 41 casinos in Macau, including five of the 10 biggest casino resorts in the world.
Macau’s rise explained
So, how did a territory of just 33-square kilometres and a population less than 700,000 end up generating annual gambling revenues seven times those of Las Vegas?
Macau is uniquely placed in being the only Chinese territory with legalized gambling. Therefore, as the Chinese economy has grown into a superpower over recent decades, and the world’s largest population experiences a rapidly expanding middle and elite class, so too does the demand of entertainment forms like gambling.
However, it is Macau’s high-roller offerings that have played a huge part in the territories rise as a gambling mecca. There are more than 300 billionaires and over 1.6 million millionaires in China and they all only have one location within the country to gamble.
Gambling revenue accounts for around half of Macau’s annual revenue, and while that has been the key driving force behind its rise to prosperity, it has also left the territory extremely vulnerable to unforeseeable circumstances, like a global pandemic…
Macau’s uncertain future
Figures released for June 2020 saw gambling revenues plunge to $89.7m – down 97% year-on-year, which was the lowest revenue figures in a year of historic lows.
It also marked the third consecutive month that Macau’s gambling revenues had fallen by more than 90% year-on-year – all as a direct result of the coronavirus pandemic.
China – the source of the Covid-19 outbreak – introduced some of the strictest measures in the world aimed at combatting the spread of the virus, impacting all aspects of the country’s economy, notably travel and tourism.
So what was Macau’s greatest strength in being the only territory in China with legalized gambling is now proving to be its weakness.
While gambling sectors in other nations have also been hit hard, they have been able to soften the blow by launching or expanding their online casino betting services. On the US and the UK, horse racing betting is still a huge market and helps companies such as TwinSpires to go against the odds and keep delivering quality services.
However, with the overwhelming majority of Macau’s market located in mainland China, where access to online casinos is largely restricted, and high-rollers unable to visit to pump money into the economy, Macau has almost ground to a standstill.
Macau’s head of government, chief executive Ho Iat Seng, has criticized the territory’s dependence on the gambling industry and has said it has left them particularly vulnerable during this time.
“With the outbreak of the novel coronavirus, the gaming and tourism industries registered significant declines, with profound impact on industries connected to these areas,” Ho said. “This demonstrates, once again, the vulnerability and the enormous risks of the Macau economy’s excessive dependence on gaming and tourism industries.”
While governments around the world are taking cautious steps to reopen their economies, travel is expected not to return to normal for quite some time.
Macau, with the assistance of the central Chinese government, are expected to eventually recover from the economic effects of the coronavirus, but this crisis has shown that even the gambling capital of the world can be crippled by a global pandemic. …
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