Macau: the attractive economic power in China

Macao is a Chinese administrative region that enjoys a prosperous economy thanks to various factors, although casinos and betting are undoubtedly the largest industrial lung of the city, and although today we can play roulette with fictitious money thanks to the internet, Macau is well known worldwide for this type of activity.

Today we will tell you about the Macanese industry and economy and the importance of casinos in this process.

A little history

In 1849, the Portuguese Government legalized gambling in Macau to generate public revenue. At the end of the 19th century, the authorities created a licensing system for Chinese gambling houses. According to some sources, more than 200 gaming casinos were required to pay taxes to the Government. The second concession of the casino monopoly was granted to the Tai Heng company in 1937. However, due to its cautious nature, the company was unable to fully exploit Macau’s economic potential.

In 1962, when the government granted monopoly rights to all forms of gambling to the Sociedade de Turismo e Diversões de Macao (STDM), a trade union made up of businessmen from Hong Kong and Macao, the industry experienced a watershed moment. The STDM introduced Western-style gambling and improved shipping between Macau and Hong Kong, attracting millions of Hong Kong players every year. In 1986, the license was extended for another 15 years; however, it expired at the end of 2001.

After Macau became part of the People’s Republic of China in 1999, the territory became a special administrative region of the country. There were no changes in Macau’s gaming policy during this transition, as the region still retained some autonomy.

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The Government of Macau ended the monopoly system in 2002, granting casino operating concessions (and sub-concessions) to: SJM, Wynn Resorts, Las Vegas Sands, Galaxy Entertainment Group, MGM Mirage and Pansy Ho Chiu-king, and Melco and PBL. On May 18, 2004, the Sands Macau casino opened near the Macau ferry terminal. STDM currently owns 16 casinos, in addition to the 8 it previously operated.

Economic aspects and their relation to betting

Macau’s economy relies heavily on games of chance, such as poker, roulette, or slot machines. Today, the gaming industry generates more than 40% of Macau’s GDP. Since the early 1960s, about 50% of Macau’s official revenue has come from gambling. The percentage remained stable until the end of the 1990s. In 1998, 44.5% of the total income of the Government came from the direct tax on games of chance.

However, after the transfer of Macao from Portugal to China, it was authorized to grant gaming licenses to companies in order to end STDM’s monopoly.

Subsequently, the gaming industry was opened up to competition, leading to a significant increase in government revenue. It also attracted more visitors to Macau. According to official figures, gambling taxes accounted for 70% of Macau’s public revenue at the time.

Also, the increase in the number of gaming venues in the area is driving customers away. Macau’s 2018 expanded at a slower pace than other emerging casino markets in Singapore, South Korea, the Philippines and Australia, according to Fitch Ratings.

Nonetheless, it remains a significantly strong economic fort for this region in China.

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The diversity of casinos and venues

Macau has 41 casinos (as of 2019), the most prominent being The Venetian Macau. Twenty-four casinos are located on the Macau mainland, while another seventeen operate in the Cotai (region area). They are all subject to a government franchise and to a set of rules agreed upon by all.

The main casino companies in Macau are SJM Holdings, Galaxy Entertainment and Las Vegas Sands, with a combined revenue of 9.7 billion in 2011.

Roulette, blackjack, slots, and baccarat are definitely popular games at these venues, but they are also known for having famous games of Asian origin, such as Sic Bo, Fan Tan, keno, and the famous mahjong.

Macau is without a doubt a gigantic economy in the world aspect and one of the main reasons is its colorful and famous casinos. However, online casinos are increasingly taking away part of their market.

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