Asia’s Las Vegas

It’s a gambling mecca that attracts thousands of tourists every day. Its streets are lined with massive casinos owned by the likes of Wynn Resorts and MGM Grand, and glitzy acts like Cirque de Soleil perform for the crowds.

Las Vegas? No, it’s Macau – Asia’s very own glittering destination for high and low rollers, which now outstrips Vegas in terms of casino revenue.

The Macau Special Administration Region is part of China. The area was colonised by the Portuguese in the 16th century, and ultimately handed back to China in 1999.

Like Hong Kong, Macau has retained a high degree of autonomy over its own affairs, and under the terms of the handover this is set to continue until 2049.

Originally set up as a fishing colony, gambling became legal in Macau in the 1850s, as a way of raising revenue for the Portuguese government.

While the industry has always been a large contributor to the GDP of the country, it exploded after the Chinese removed the monopoly licence system in 2002.

This opened up the industry to more casino companies including the biggest names in the business, bringing with them well-known American casino brands like The Sands Macau The Venetian Macau.

By 2006, Macau was earning more in revenue than Las Vegas. The growth was helped by being the only gambling outlet in East Asia, and Chinese gamblers’ taste for playing high-stakes table games as opposed to slot machines.

While the gambling boom has brought with it huge amounts of money, with the Government obtaining around 70% of its revenue from associated taxes, it also has a downside.

Casino owners may be raking in the dough, but not much of it ends up in the pockets of the average Maccanese citizen, who has had to contend with all the negative effects of growth over the last decade including congestion and high prices.

The Macau government has been accused of taking a pretty lax attitude towards spreading the wealth and of colluding with big business.

Gambling has always been a lure for organised crime syndicates and Macau, both before and after the handover is no exception.

The Mainland Chinese Government and Macau officials have worked hard to crack down on Triad activity, which does appear to be for the most part under control.

Some commentators say that this is because unlike in the old days of the monopoly, with a bigger market there are more high rollers to go around, so there’s no need for gangs to start up turf wars.

An economy based largely on tourism and gambling like Macau’s is also particularly susceptible to recession and activities that adversely affect the flow of tourists.

Macau was badly affected by the global credit crunch at the end of 2008. At the same time China – which watches the gambling industry closely and not necessarily with a great deal of fondness – tightened up on visas for Chinese travelling to Macau, affecting the number of gamblers arriving.

Macau does seem to have rebounded from the slump, with revenue in December last year 48 percent up on the previous December and share prices starting to rise. No doubt, the casinos are gearing up already for a much better 2010.

Long term though there are some things Macau will have to be wary of. Macau has competition for the gambling dollar in Asia, with Singapore and Vietnam opening casinos, and other countries in the region considering relaxing their regulations to claim their slice of the pie.

The other cloud on the horizon is what will happen in 2049, when China takes complete control of Macau. Who knows what communist China will do with an enclave so completely devoted to capitalism and Western-style decadence.

In the meantime though, Macau continues to throw the dice and rack up the profits.

By Jo Blick