Gambling is a worldwide industry and many countries around the globe have emulated the strategy laid out by Las Vegas. Macau has become the gambling king of the world but it took a tough blow in 2015 and is looking for ways to turn things around in 2016.
Macau’s gambling revenue fell to a five-year low in 2015, taking in $29 billion. While that is still a lot of money, consider this: their major casinos would usually earn $70 billion in a year.
There are a few reasons why this has happened but the main reason was that changes in the Chinese government – especially in the personnel that oversees the regulation of gambling. They have been doing their best to tighten regulations to crack down on corruption. However, as a result, they’ve scared off a lot of high-stakes players.
New regulators were stricter in how the casinos in Macau operated and those regulations proved to be a game-changer. The VIP players, who are often tied to and measured by the game baccarat, were not playing as much this year. That’s because they were spooked. As a result, the house took in 41% less in gambling receipts year over year.
Macau’s issues were compounded by the fact that the economy wasn’t great and players – regular or otherwise – didn’t have as much disposable income to spend at the casinos.
Bloomberg is estimating that the hard times in Macau are not over as they’re looking at another 13% drop in the VIP segment next year as well as 5-7% from the collective masses. However, they are projecting smoother sailing in 2017.
The landscape has clearly changed in terms of the government’s sentiment towards Macau. When it opened up in 2001, it was welcomed to a liberalized market with favorable government policies. The goal back then was to help give the economy a boost.
However, times have changed and the government is tightening up in terms of Macau. Nowadays, there are tougher rules on smoking, gaming tables and payment methods used at the casinos.
As far as Las Vegas is concerned it just keeps on chugging along. They were well behind Macau in 2014 when Macau outpaced them seven-fold, but they’ve cut that deficit down to about 4.6 this year.