Can Gambling Revenues Bounce Back in Macau?

They say imitation is the sincerest form of flattery. However, imitation alone isn't a business plan. Macau, the autonomous territory in China, is finding that out the hard way.

Macau has recreated a Las Vegas-style area in China with casinos, hotels and bright lights. However, they're struggling to generate gambling profits these days - just like Las Vegas did at one point - and they're finding it hard to adjust.

It all began with a government crackdown on gambling. Chinese President Xi Jinping went on the offensive a few years ago as he put together a task force to take out corruption in gambling. Government officials were receiving dirty money for permits to build casinos, then laundering it through the casinos. That led to plenty of regulation and rules, and that has hurt the growth of the businesses in Macau. Now casino revenues continue to plummet as June was the 25th month in a row that they have declined.

The government has highlighted the negatives of gambling, which has helped get the support they need for stricter rules. There has been a jump in gambling addiction over the last few years and violent incidents as well. There have been multiple incidents in which casino employees have been harmed by players who have had rough nights on the tables. However, they have to continue to work at the casinos because, outside of those places, there isn't much in the way of work.

There is not a lot to Macau, a place of which many people on this side of the world have never heard. But then you dig a bit deeper, you'll find out that it has around 649,000 people in an area of 11.7 square miles, making it one of the most densely populated regions in the world. It has a high life expectancy and it is also a very wealthy area, which is how the gambling industry took off in the mid-2000's. At one point, it was among the biggest destinations in the world for gambling. However, a decade later, that has changed and many are wondering if it can recover.

What's interesting is that Sin City has had their fair share of challenges at the table, but they've adjusted. Sure, betting on sports at a Las Vegas sportsbook is archaic compared to betting online, but Las Vegas has adjusted by creating other streams of revenue. The dining scene has become world class, the pool parties are legendary and the nightlife attracts people from every demographic. It's a sexy destination - not just for gambling.

But Macau mostly relies on the gambling, and absent other sources of revenue they're just not thriving like they once did. The Chinese culture loves to gamble, and if the government wasn't so strict about it Macau would be just fine. But with rules as tight as they are, there are some really nervous gambling business in Macau who are trying to figure out how to adjust.

So maybe it's time to copy Las Vegas once more. The new initiative in Macau is to try to make visitors see that there is more to Macau than gambling. There is old architecture, great food and other attractions. However, gambling has been done in Macau for so long it is going to be tough to change that image right off the bat. Maybe they'll have to call on celebrity chefs and celebrity performers - like Las Vegas has done - to show that there is more to it and help change the image. However, the Asian culture - especially in China - is quite different and it's not as simple as copying the Las Vegas approach.

Optimists hope that the Chinese government cleans up the corruption in gambling and eventually loosens up the rules once again. Until then, Macau will have to find some other ways to reverse the decline in gambling revenue.