Macau: Struggling with a gambling addiction

Chips down

Struggling with a gambling addiction

Jan 17th 2015 | MACAU

 

 

THE fire that sent clouds of smoke billowing from the roof of the Galaxy casino complex on Macau’s glitzy Cotai strip on January 8th had an ominous look about it. Since the tiny enclave’s gaming industry, once a monopoly, was opened to competition in 2002, it has rapidly become the world’s biggest. It is now seven times larger than that of Las Vegas, thanks mainly to visitors from the Chinese mainland where betting is banned. The boom has given the sleepy former Portuguese colony the world’s fourth-highest GDP per head. Nearly half its output is linked to gaming.
 

Yet Macau’s “casino capitalism” is, like the Galaxy’s unfinished roof, looking charred. Having risen remorselessly, betting revenues declined by 2.6% in 2014. In December they plummeted by 30% year-on-year. The economy, too, shrank in the third quarter. The downturn will be hard to reverse.

 

 

China’s economic slowdown is one reason for the end of the boom. A casino attendant says a smoking ban has also deterred punters. (Around him, many seats are empty; under-employed croupiers stare vacantly, while a handful of smokers puff forlornly in a corner room.) But the biggest factor is China’s sweeping crackdown on corruption. Many of the high-rollers from the mainland gamble with the proceeds of dodgy deals. Macau’s government has supported the crackdown by curbing transactions involving China UnionPay, a state-owned firm whose payment cards are widely used on the mainland and at Macau’s casinos (often to circumvent the mainland’s currency controls).

 Visas have been harder to obtain. Chinese big-spenders, fearful of being spotted by anti-corruption officers, have grown wary of Macau.
 

China’s president, Xi Jinping, is among those who say Macau should diversify. That would make sense to some of Macau’s 630,000 people, who see an irksome side to their city’s popularity. The city attracts about 30m visits a year, most of them from the mainland (Hong Kong receives well over 50m, but it is far larger). Demand from mainlanders has pushed up property prices to increasingly unaffordable levels for many Macanese, exacerbating inequality and stoking discontent. But finding new money-spinners will be difficult, as Macau has little manufacturing and none of Hong Kong’s prowess in trade and finance.
 

Many are still betting on gambling. Eight new casino complexes are in the works, promising almost to double the supply of hotel rooms on the strip. They might attract more visitors of the ordinary kind, who would try out the casinos but also spend money on other attractions. As licence renewals loom, Macau is forcing operators to invest in non-gaming activities, such as conferences and shows. But opening dates for new facilities are being delayed. As any hardened gambler knows, it can be difficult to kick the habit.


http://www.economist.com/news/china/21639558-struggling-gambling-addiction-chips-down