Fears About Macau Gambling Slide Grow As Chinese Economy Dips Lower

Las Vegas, Nevada

Macau has been at the forefront of the gambling world since 2007, when the revenues of Macau overtook the revenues of Vegas. Today, Macau makes three times the money per year that Las Vegas does. However, the good times may be ending in Macau sooner rather than later, because the economy in China is slowing. The slowdown of the economy in China is bad news for Macau casinos.

What Is Going on in China?

Many people believe that the economic slowdown in China is due to the ongoing trade war with the United States. Since the trade war began earlier this year, China and the United States have been lobbying billions of dollars of restrictions on each other. China has placed tariffs on US items such as meat and grains, while the US has placed tariffs on Chinese steel and electronics. However, Chinese exports have held up well under the tariff strain, with exports to the US increasing. Many businesses in the US have continued to import Chinese goods despite the tariffs. In fact, US companies have purchased more Chinese goods ahead of any new tariffs.

The problem with China, say experts, is that it has become a victim of its own excess. The Chinese have gotten used to doing business with the US, who is a major importer of Chinese goods.

The Slowdown in China

Slowdown in ChinaChina, according to economists, began its own slowdown in both the industrial and consumer sectors. Demand in China for consumer goods has declined. Orders for industrial products from factories have also declined. China has begun to over-regulate its industries, and the over-regulation is beginning to show on industrial orders. Businesses are also anticipating that eventually, the pain of the ongoing trade war will take effect in China, and really begin to hurt China’s industry. Purchasing manager indexes have fallen past the line of profit, which signals that 2019 will be a more difficult year.

The overregulation of industry has been troubling in the large economy for some time. The Chinese government has started the crackdown is necessary to weed out corrupting influences in industry. However, the overregulation and government interference has managed to have a chilling effect on present and future orders, as well as consumer spending.

The Effect on Macau

Macau is operating under some larger issues, according to Chinese economists. First, the country is facing an economic slowdown, which makes gamblers nervous about spending money. The government in China is also rattling its saber with Macau’s casinos to ensure that money laundering is not taking place. The government fears that casinos are being used by criminal gangs in China to launder money. For that reason, the government has put new policies in place regarding the amount of money that can be brought into casinos. This has a direct effect on high rollers from China, which make up nearly three-quarters of the casino business. Macau has catered to its high rolling clients for years. The casinos offer free junkets to clients who do a great deal of business with them. However, since the government crackdown, high rollers have been looking elsewhere to spend their gambling dollars. The last thing they want is the government looking over their shoulder while they are placing bets.

The effect on Macau’s economy has been chilling as well. The government of Macau receives over half of its operating revenue from casinos. If the casinos, and the Chinese economy continue to slide, so will the economy of Macau. While it is doubtful that Macau will again move into second place behind Vegas in gambling, it is possible that some casinos will fold.

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