Macau, situated between Hong Kong and Mainland China is the biggest gambling hub in the world and home to some of the biggest casino’s in the world. This gambling paradise has done extremely well during the last decade and has been the biggest source of revenue for Macau. However, all that changed in 2014 as political tensions in Hong Kong and a corruption crackdown by the Chinese government destabilized Macau’s casino industry and sent it into a downward slump which has continued.
Mainland China tightened its laws and has been carefully monitoring money laundering, corruption and high end transactions in Macau. This move has clearly scared away Macau’s big spenders and as a result has had a significant impact on Macau’s casinos. Many believed that this crackdown would last for a few months and then things would return to normal.
However, China has stepped up its anti-corruption efforts and has not let Macau’s revenue slump change its policy. Gambling analysts believe Macau’s casinos will continue to suffer and lose money until the Chinese government stops its crackdown.
Macau’s casinos tend to attract high spenders who prefer not to reveal their sources of income or the amount of actual tax they pay. Amidst the glam and bling, Macau’s casino industry has also witnessed a boom in human trafficking, prostitution and money laundering.
The casino industry brought in over $35 billion in revenue in 2013 and expected to generate as much as $80 billion by 2020. The casino industry also provides jobs to thousands of Chinese individuals.
China’s government confirmed in December that it would not slack up on its crackdown and was not very concerned about the fall in revenues. Beijing asked authorities in Macau to stop depending on the casino industry for revenue and to start adopting a new plan that would encourage its citizens to pursue education and careers in law, medicine and education.
The chairman of the Macau Basic Law Committee, Li Fei said
The overwhelming dominance of gambling in Macau is not in line with the overall interest of Macau. The fact that Macau’s economy, especially gaming, is closely connected with the mainland determines that when one judges the overall interest of Macau, one cannot focus only on Macau’s economic growth and tax revenue. One must take into account the socioeconomic safety, stability and developmental interest of the mainland and the whole nation