Macau —
Macau, a former Portuguese colony that has recently become the world’s biggest gambling city, is embarking on an experiment to reinvent itself, but it’s unclear whether it will succeed.
Visitors to the city notice a change compared to 10 or 20 years ago.
From The Londoner to MGM Cotai, newer and bigger casino resorts are popping up, offering more than just slot machines and gambling tables; they’re also offering non-gaming entertainment, from water slides to concerts. And zip lines.
After decades of relying on gambling revenue, the city has been betting on non-gambling attractions to attract non-gambling residents in hopes of diversifying its economy.
But behind the splashes and zip lines, Macau is struggling to live up to its nickname, the “Las Vegas of the East.”
Macau’s casino revenue was more than three times that of Las Vegas before the COVID-19 pandemic, but unlike the U.S. state of Nevada, where 70% of casino revenue is non-casino and 30% is casino, Macau’s ratio is just 5% non-casino and 95% casino, according to Macau-based consultancy IGamiX.
This is a far cry from China’s wishes when Macau returned to Chinese rule in 1999 and shortly thereafter ended its casino monopoly, opening up the sector to foreign competition in the hopes of turning Macau into a leisure and entertainment hub.
“When they leaked the secrets, I don’t think anyone expected the market to be primarily mainland China,” said Ben Lee, a games analyst at IGamiX. “Over the last 20 years, instead of Macau becoming the world’s tourism capital, it has become the world’s Chinese gambling capital. It was never meant to be. The idea was to turn Macau into Las Vegas.”
The Chinese government has been pushing Macau to wean itself off gambling, limiting Chinese residents of some provinces to six visits a year to reduce the numbers of Chinese gamblers congregating in the only place gambling is allowed in China.
Macau casino operators have agreed to government urging to diversify their customer base and invest heavily in non-gambling attractions to attract non-Chinese tourists. (Photo by Ralph Jennings)
The Chinese government has also sought to stem the flow of an estimated $150 billion a year of Chinese capital, particularly corrupt funds, into Macau and has banned mainland China from promoting overseas gambling.
These measures, along with President Xi Jinping’s crackdown on corruption, have caused Macau’s total casino revenue to plummet from a record $45 billion in 2013 to $22 billion last year.
But Macau remains heavily reliant on gambling, which accounted for more than 50% of its GDP pre-COVID-19 and 60% of government revenues by 2023, according to official statistics.
So last year the Macau government began requiring casino operators to diversify their customer base and invest heavily in non-gambling businesses as a condition for renewing their licenses, on top of a 40 percent casino tax.
In recent years, Macau casinos have built non-gambling attractions such as water parks, zip lines and arcades, and there are plans to build even more attractions under the terms of new license renewals. (Photo courtesy of Studio City)
The six concessionaires – Wynn, Sands, SJM, MGM, Melco and Galaxy – have committed to investing a combined $13.6 billion to tap overseas customer markets and develop non-gaming projects such as conventions and exhibitions, entertainment and performance.
But a year later, it’s unclear whether this new approach will work.
Observers said many casino operators remain reluctant to shift their focus from gambling, where it’s easier to make money, to less profitable non-gambling businesses.
“We’ve lived with casinos for decades. It’s not that easy to say we want to diversify a company. We have to develop this kind of mentality for diversification. It takes time,” said community leader Miguel Sena Fernández. “We’re not seeing any signs of it yet.”
Analysts said some casinos were making “half-hearted” attempts to satisfy government orders, such as simply opening retail stores or hosting concerts by oldies singers who had relocated from Las Vegas.
The casino operator did not respond to VOA’s interview requests.
In a statement to VOA, the Macau Government Tourism Office said Macau has seen an increase in the number of visitors for non-gambling purposes and that “the government’s efforts to diversify tourism destinations have been well received.”
According to the agency, exit polls showed that the top three reasons tourists visited were shopping, sightseeing and fine dining.
However, the latest statistics show that gambling will still account for around 80% of tourism revenue in 2022.
Experts say recreating Las Vegas may be difficult.
“Las Vegas has always had an alternative economy. It has a leisure industry that diversifies Las Vegas and it’s not just gambling. My friends don’t go to Las Vegas to gamble. They say it’s nothing like Macau, where it’s all casinos, casinos, casinos,” Fernandez said.
He and others see the requirements the government is imposing on casinos to promote non-gambling as a positive move.
“Now is our chance to change the rules of the game,” said Fernandez, president of the Macanese Association, which hopes Macau’s unique mixed-race culture will also be promoted.
Macau’s casino operators are tasked with redeveloping old neighborhoods, and locals hope that non-gaming investments will also help preserve Macau’s architecture and promote local culture. (Photo by Ralph Jennings)
Some casinos are starting to understand what draws customers: Galaxy organized a 23,000-ticket concert by the South Korean girl group Blackpink last year that sold out in seconds.
“It sent shock waves through the entertainment world. This is huge,” Lee said. “Blackpink could have had two weeks of shows instead of two nights.”
But reasons for the lack of international tourists visiting Macau may include a lack of direct flights to Macau, competition from casinos opening in other parts of Asia, tourist services for Chinese-speaking tourists, and a transport system that struggles to cope with the huge numbers of tourists, with a shortage of taxis and overcrowded buses, especially on public holidays, forcing many visitors to wait in long queues.
Amid these growing pains, there are concerns that government “interference” in casino operations could hurt profits, such as by cracking down on the recruitment of cross-border Chinese high rollers and dictating the number of gambling tables and slot machines that can be installed in casinos.
“The Chinese Communist Party has never been fond of legal gambling, so they’ve decided to use both carrots and sticks to reshape the world’s largest casino market,” gambling expert I. Nelson Rose wrote in a blog post. “Perhaps the greatest danger to Macau’s free-market casinos is government interference in their day-to-day operations,” he added.
For now, casino operators are complying with the regulations by attracting tourists from other countries, building more recreational facilities, including new water parks and theme parks, and arranging more performances.
Each concessionaire is also allocated old areas to redevelop, ranging from wharves and shipyards to fortified areas and former firecracker factories.
“This is the kind of large-scale experiment that’s never been done anywhere else in this way,” said Tim Simpson, author of “Betting on Macau: Casino Capitalism and China’s Consumer Revolution.”
“It’s an interesting social and economic experiment to be able to entrust them with the task of revitalizing the area, attracting a range of tourists to the city and providing sporting and music events. It will be interesting to see the results of this great experiment being conducted here.”
That may mean less profitability and more work for the casinos, but they have no choice and it seems there is no turning back.
“Ultimately, this is good for Macau. It’s something we should have done in the first 20 years,” Lee said.
If Macau is successful, it could become worthy of the nickname “The Las Vegas of Asia.”
