Gambling drop takes toll on Macau

Gambling drop takes toll on Macau

Wednesday, September 2, 2015
The Chinese province's government has been forced to review spending

Macau saw gambling revenue drop by 35.5 per cent in August as the Chinese special administrative region was forced to announce a public spending freeze.

It was a 15th consecutive month of falling turnover for the world’s biggest gambling zone – although the 18.6 billion patacas (€2.07bn/$2.33bn) recorded for the month was still more than double Nevada’s $922.8m collected in July.

The figures come on the heels of data showing Macau’s economy, which relies on the territory’s 36 casinos for over 80 per cent of tax revenues, shrunk 26.4 per cent in the second quarter – its third straight quarter of double-digit declines.

With China’s economy stalling, a clampdown on money-laundering and extension of a smoking ban all taking their toll, Macau’s government announced that all public sector expenditure will be subject to “austerity measures” including the freezing of a certain percentage of assets and services included in the annual budget.

It is believed that Chinese authorities want Macau to encourage greater focus on non-gambling initiatives, creating an Asian Las Vegas. The US city made some 63 per cent of casino-resort revenue from non-gambling activities in 2014, while that figure is just seven per cent in Macau.

Analysts expect revenue to improve in second half of the year with the opening of Melco’s movie-themed Studio City resort in October and remain optimistic about the territory’s long-term prospects, noting that just 2-3 per cent of China’s 1.4 billion population has visited Macau.

However, not everyone shares the optimism that Macau can reposition itself, with Lawrence Ho, chief executive of Melco Crown Entertainment, recently telling the Macau Daily Times newspaper that change would be futile.

“The cold hard truth is, non-gaming doesn’t make any money and it will never make any money,” he said. “For all the foolish people out there that think non-gaming is going to save the day, it’s not.”
 

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