How Macau Became the World’s Casino Capital

How Macau Became the World’s Casino Capital

Macau has been known as the Las Vegas of China. Macau is a region that was colonized by the Portuguese, and has become much more fascinating and appealing than the City of Lights. The area was even named the casino capital of the world, since gambling revenues exceeded those received in the state of Nevada in 2010. In addition to attracting gamblers, the beautiful architecture is appealing as well.

The advancement of China and globalization play a huge part in Macau’s development. Globalization is key is because a number of foreign casino companies from various countries have made their mark in Macau. The casinos have brought about economy empowerment for China’s citizens. This has allowed Chinese people to travel more, see various parts of the world, and of course, gamble.

A Brief History of Macau

macau casinosMacau became Chinese territory again in 1999 and was classified as a special administrative region. Macau is governed by different laws than mainland China. Macau is part of Greater China, which also includes China and Hong Kong. However, it is the only Greater China region where it is legal to gamble, which makes it the sole gambling site in the country.

In the years before Macau was handed back over to China, Macau was known as a rough region. Violence and organized crime ran rampant, since there were a number of sub-contracted gaming rooms in the country that were reserved for VIP. These rooms hosted high-stakes games the general public wasn’t aware of. The games significantly contributed to the financial stability of Macau. People loved gambling there because the overall gaming experience was different from other locations.

Macau focused on high spenders in terms of gambling, and provided special perks, and private rooms for these players. The region didn’t cater as much to gamblers in the mass market, but revenues were still high due to wealthy gamblers. In fact, rich gamblers were 66 percent of casino revenue in 2013.

Investments That Went International

Macau is known for getting substantial tax revenue from its government in terms of casinos. In 2001, casino revenue made up 40 percent of all revenue collected from taxes.  A decade later, government income from casino gambling taxes came to 81 percent of all collected tax revenue. This huge change drove the choice to open the casino industry in Macau and invite firms from other countries to compete for casino licensing.

Only one company was legally licensed to run casinos in Macau until 2001. For about forty years, the gambling industry was monopolized by Sociedade de Turismo e Diversões de Macau, SA (STDM). After 2002, a number of foreign multinational companies and joint ventures were awarded licenses. The firms were from the United States, Hong Kong, and Australia. A number of popular names from Las Vegas, including MGM, Las Vegas Sands, Wynn Resorts, and Galaxy, vied for space in Macau.

These companies invested substantially in new, large casino resort facilities. The sites included high-end malls for shopping and top-notch hotels. Macau is a relatively small region; originally, the country consisted of two tiny islands and a mainland peninsula. Considering this, it was necessary to have land reclamation projects in place due to the booming gambling industry. By 2010, Macau included six square kilometers of new land that connected the small islands of Taipa and Coloane. These islands host the large casino complexes.

The new casinos have provided jobs for the people who live in Macau. However, the industry has had a bigger impact on the economy, since tourists come to the region often and tax revenue has increased. After ten years of steady growth in the gambling industry due to the opening of new gaming facilities, tax revenue from this industry reached a 2014 peak and then went down after Xi Jinping, the president of China, implemented an anti-corruption campaign.

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