Xi Jinping’s Effect On Casinos In Macau

Casino lights in Macau, 15th anniversary of reunification

The Chinese have had Macau back for fifteen years now but it is only recently their ownership has begun to effect the bottom line

Hong Kong’s protests may have stolen all the headlines and provided endless footage of gormless hipsters looking at their mobile phones and wondering why the police are hitting them for bringing entire districts of a city to a standstill for months at a time – go figure, kids, the man just sucks, eh? Try doing that in Detroit and see what they do to you – but it is only one of China’s Special Administrative Regions to facing issues at the very core of life for its denizens.

Just across the water, barely an hour away on the shuttling ferry out of Tsim Sha Tsui, Macau has been squaring up to issues so central to its current existence that it makes the students in Hong Kong look very much as dealing with the peripheries of life. Politics is certainly important, and freedom of it possibly worth fighting for (although come the revolution I’ve already volunteered to do the creche) however it is economics that drives the world, not politicians.

President To Visit Macau

• Xi Jinping to attend Macau ceremony
• 15 years of reunification
• China’s crackdown damaging casinos

Of course Macau’s economy has been the source of so many headlines in the gambling news media that if it took a picture of it’s backside it would probably break the internet. The stunning rise of it as a destination, and the vast sums brought to it by gamblers, particularly high rolling gamblers, from mainland China (a market the size of no other) scattering hugely successful statistics and revenue levels across those that had been quick to take advantage of the market.

There was a new destination to rival Vegas, right on the doorstep of a billion people who enjoy gambling amongst whom are the highest number of millionaires in the world. With no prospect of internet betting in China becoming legal anytime soon, gambling itself isn’t legal in mainland China, Macau was the place to go, and they did, in huge numbers, their money transferred by junket operators, giving this tiny Special Administrative Region an income to rival many far larger nations.

Crackdown Causes Chaos

Naturally with all that money floating around, and indeed floating off to the coffers of Casino owners in other nations, China was always going to take an interest in proceedings, their taxes a natural feature of the presences of casinos in the region at all, but their interest started to effect the very basis of Macau. Whilst in Hong Kong the population were less than happy China would be vetting their next political leader, Macau faced less direct interference, as China began to “effect” their customers.

Crackdowns on particular crime varieties are commonplace the world over, with the specifics very much dependent upon the locality, but China’s crackdowns tend to be far wider and far more harsh. The recent attempts to combat “corruption” is but one in a whole laundry list of such efforts, but this one has produced high profile results with officials busted for bribery and even decorated generals not escaping the long arm of the law.

Those that like to bet on sport in China naturally go to Hong Kong’s racecourses, those that like cards go to Macau, and the practices of junket operators, catering to both, always on the edge of the law, have been looked upon as a source of information on just who has how much money going where. This has sent spasms of anxiety throughout China with many operators simply dropping out of the business entirely and others being far more cautious……and expensive.

To a large degree the junket operators are the lifeblood of Macau, their organized visits with the facility for Chinese nationals to have funds provided from home led to the many a Chinese poker room to be full of money the providence of which no one was too readily making public. The authorities cracking down on this business has had a massive knock on effect in Macau’s profit margins, and it’s not the only part that has.

Visa Limits Constricted

The reduction of the number of days a visa can be obtained for from the mainland Chinese authorities has had a very negative impact on gambling revenues which have dropped for six months in a row, and share prices of the casinos involved have reflected this lack of confidence in the market as it stands. There are those that say this corruption crackdown will blow over, but those visa regulations won’t, and in the meantime highrollers in China are doubtless finding other facility elsewhere.

chinese general secretary macau reunification
The harsh Chinese gambling laws are unlikely to be revised in the near term and Macau will always stand out for special attention as the center of Chinese gambling. The high rollers that are hiding away in some of the other destinations that sprung up around the pacific rim to cater for them and try to gain their gambling cash, will be coming less often for less time, even if they return in numbers so there have been calls for Macau to diversify its attraction to visitors.

This is the same harsh economic lesson that Vegas has learned, Atlantic City is having to and Macau must now endure. 15 years after its reunification with mainland China President Xi Jinping will visit the region to commemorate this return of the former Portuguese possession to its rightful owners, but his influence on the economic mainstay of the region might be far more adverse than his audience might wish.

China is still coming to terms with the inherent difficulties of operating it’s Special Administrative Regions, the Democracy demands in Hong Kong apparently treated with some degree of kid gloves, but the association of so much money with Macau has meant China is wielding a far larger stick and a there are no gloves in sight. Asking Macau to diversify its attractions is easily done, but strangling it at the same time smacks of impatience and a lack of economic common sense.

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