Editorial

Tuesday, 22 December 2009 03:17

On 20th December 2009, Macau celebrates its 10th anniversary since Portugal handed the colony back to China and casino gambling went from strength to strength.

Ten years earlier, the first chief executive of Macau, Edmund Ho took office overseeing a sleepy colony where the small casino gambling industry monopoly was run by Stanley Ho (no relation), Hong Kong's business mogul and millionaire casino owner. Its economy was small and getting smaller while organized crime gangs of Triads ran the streets where they killed openly without fear of reprisals. Now it is time for Edmund Ho to step down and hand over the office to his successor and new chief executive Fernando Chui.

Ho leaves behind him a tale of one of the most incredible financial success stories the gambling world has ever seen. This is the astronomical rise in the fortunes of the once insignificant Portuguese trading colony that in 2006 eclipsed the gambling revenue generating capacity of Las Vegas itself to become the largest centre for casino gambling in the world.

In the first ten months of this year, Macau managed to attract almost 18 million tourists. During that time, gambling revenues topped $12 billion and there is no indication that there will be any slow down in these continually rising figures. That is quite a feat considering the local population of the colony number only just over half a million people. The number of casinos operating in Macau has risen from the 24 that outdid Las Vegas in 2006 to the 33 that are in operation today.

While the colony's main player, Stanley Ho ran a virtual monopoly in the early days, that was broken in 2002 when it became evident that the area was expanding faster than any other in the world at the time. Then two big names from Las Vegas, Sheldon Adelson and Steve Wynn moved in and fuelled the hotel and casino boom that was to see Macau average a double digit Gross Domestic Product (GDP) growth that was sustained between 2002 and 2009.

Despite the phenomenal growth and continuing potential for more, there has always been a shadow over the colony in the form of the unpredictable governing politicians in Beijing. Similar to Hong Kong, the small region of Macau is an official part of China. Although it has its own separate government it is still ultimately controlled by Beijing. But where Macau differs from Hong Kong is in its dependence on China for the steady stream of eager gambling tourists that flock to its casinos every day. That is thanks to the fact that Macau is the sole area in the whole of China where gambling in casinos is legal.

In 2008, the growth of its revenue and visitor numbers were actually checked when the Chinese government imposed a statuary limitation on the numbers of visits each resident from the mainland could make to Macau. Visitor numbers were reduced and revenue derived from gambling fell by as much as 30% in January this year. Sands even halted construction of a number of casino building projects which resulted in the layoff of several thousand local workers. Alarmed by the sudden drop in business and the resulting job losses, the central Chinese government quickly eased the restrictions on visitation and Macau immediately recovered. It reported a 59% increase in gambling revenue to November when compared to the same period in 2008.

Despite the huge revenue generated by casino gambling, the region is still financially vulnerable thanks to a fickle gambling industry as well as the unpredictability of Beijing's politicians. The focus has moved away from the cultural identity of Macau with a lack of government support for the artistic and cultural side of the region which has dismayed local residents. The casinos have overpowered everything about Macau and residents fear it will soon devolve into just another gambling city full of casinos. They want to promote the unique history of Macau in the hope of attracting tourists that are not solely interested in gambling.

Despite this, it cannot be denied that the casinos have breathed life into an area that, prior to the emergence of gambling tourism, had in excess of 7,000 families who were living in poverty. The profits from gambling have filtered down to many of the local residents in the form of the jobs that have been created by the casinos. This has brought the number of families living below the poverty line to below 3,000 today.

How ever Macau's new chief executive plays his role in office, one thing is for sure. That is as long as Macau can keep the central government of China happy, they are unlikely to rock a boat that has been very kind to an area that was once a small Portuguese outpost with little to mark the importance which it has carved out for itself thanks to the billions of casino dollars that flood into its casinos each year.