Macau, the former Portuguese colony returned to Chinese rule fifteen years ago and this week the Chinese leader Xi Jiping arrived in Macau to commemorate this event. Over the years Macau has become the world’s gambling capital taking over from Las Vegas. Income from gambling in Macau’s casinos was at one time seven times that of the casinos in Las Vegas. Macau is the only Chinese territory where casinos are legal and this has meant it attracted vast numbers of players from mainland China. However, for the past two years this influx of Chinese gamblers has been adversely affected by a campaign against corruption being carried in China. The person behind this anti-corruption drive is Xi Jinping so most of Macau’s casino operators are not expecting to hear good news from him during his visit this week.
Chinese crackdown costs Macau Casinos 75 billion dollars
Macau has tried to diversify its economy in recent years to attempt to move away from an almost total reliance on gambling revenue. Pressure to do so has come from the Chinese authorities and it is expected that Xi Jiping’s visit will reinforce this message. Some believe that the territory’s casinos may be used by businesses and officials in China to move money to tax havens or other places. The crackdown on money moving through Macau is to continue even though many had thought that the campaign would end soon. The opposite now appears to be true with Xi Jiping stepping up investigations into what appear to be irregular money transfers through casinos. Previous Chinese anti-corruption campaigns have not lasted as long as the present one. There is also the problem of the political and social unrest in Hong Kong so the Chinese authorities are determined to hammer home the message that Macau needs to reduce its reliance on income from casino gambling. So far even the announcement that the anti-corruption drive would continue has contributed to the 75 billion dollars lost to Macau’s casinos this year.
The six main casinos in Macau always attracted high rollers from mainland China and these would spend huge amounts in the top casinos. This year was the first since 2009 that Macau’s economy didn’t grow and it might be the first time that casino income has dropped. There has been a decrease in casino income for the past six months. This can mostly be attributed to the fact that fewer VIP players are gambling in Macau due to the ongoing investigations in mainland China. Over 80 per cent of Macau’s income last year came from gambling and about two thirds of these gamblers were high rollers. Several of the territory’s leading casinos lost share value leading to a total loss of 75 billion dollars in 2014. Macau’s SJM Holdings belonging to Stanley Ho lost just over 50 per cent while international casinos belonging to Steve Wynn and Sheldon Adelson lost almost 40 per cent.