Will Macau’s lucky streak continue?

The Venetian Hotel, Macao -  The largest casino in the worldIn recent years, Macau has emerged as one of the world’s biggest destination for gambling and casino-based entertainment. It is in Macau that you will find some of the world’s biggest casinos, the most popular casinos, the most extravagant casinos.

However in recent days we have begun to see reports that Macau’s economy has slowed significantly, that it’s GDP (Gross Domestic Product) has plunged.

In this article we take a look at what is happening to Macau’s economy and what this might potentially mean for its casinos.

The impact of corruption

The main issue that seems to be impacting Macau’s economy is a crackdown on corruption. The investigation into corruption is being driven by the authorities of mainland China. As most of Macau’s casino operators are listed in Hong Kong, they are regulated by mainland China.

As a former Portuguese colony, Macau is the only part of China where casinos are permitted to operate.

The decline in Macau’s economy can be directly linked to the performance of its casinos. The most recent corporate filings reveal that Macau’s six biggest casino operators have seen their profits drop by 40% in the first half of the current financial year.

Why are casino profits dropping?

Much of Macau’s growth as a casino destination was driven by high-rollers from China travelling to Macau to enjoy casino-based entertainment. With the challenges being faced by China’s economy, and an increasing focus on anti-corruption investigations (which has begun to restrict the flow and availability of cash in China), there appears to be a significantly lower appetite from mainland China for the casinos of Macau.

How is this impacting the casinos of Macau?

Already some of the Macau casinos are reportedly closing their VIP gambling rooms and reducing costs by decreasing their staffing.

The former Portuguese colony of Macau has a relatively small population of just 600,000, but it’s unemployment rate is just 1.8 per cent. Most of the population is directly or indirectly involved in the operation of the casinos.

However, even with the reduction in profits, Macau is delivering massive turnover from its casinos – a total revenue that is about five times greater than the revenues generated by the casinos of Las Vegas.

Is Macau still an attractive destination for gamblers?

Macau’s casinos are glitzy casino hotel and entertainment complexes that have to be seen to be believed. Their profits may be down slightly, but these are still extravagant destinations that are exciting and impressive.

What does this mean for the future?

Macau’s economy relies on its casinos. Already a major gambling and casino entertainment destination, further developments are already under construction, with $20 billion worth of new casino facilities due to open within the next two years. Indications at this stage is that all of the planned construction projects will go ahead, with the hope that operators will see a rebound in the performance of the casinos of Macau. What the longer-term future holds seems to depend very much on what happens with the Chinese economy.

If you haven’t been to the casinos of Macau, then this could be a good time to go – you are bound to receive a warm welcome.

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