An outdoor card game. PHOTO BY JOAN LEBOLD COHEN.
Since 300 BCE betting on dice and other games of luck or fortune have been part of China’s historical record. Gambling is now illegal in on the mainland but permitted in Macao, where Chinese casino visitors drive the region’s economy.
In 2001 the Macao Special Administrative Region (SAR) liberalized the Macao casino industry, issuing three gaming concessions to local and international operators and ending the forty-year-old casino monopoly by the Sociedade de Turismo e Diversoes de Macao (STDM). Under the monopoly market, STDM generated $2.32 billion gross revenue from eleven casinos in 2001, which accounted for approximately 60 percent of Macao’s gross domestic product. Since the liberalization, several new casinos have opened, including Venetian Macao, MGM Grand Macao, and Wynn Macao, all run by U.S. companies. STDM has also opened and renovated several casinos. Several other casino hotels and resorts are due to open in the near future.
Individual Visit Scheme
In the summer of 2003, China introduced the Individual Visit Scheme (IVS) to encourage individual mainland Chinese citizens in designated cities to visit Hong Kong and Macao. (Prior to the IVS, people who wanted to travel to these destinations had to be part of a tour group.) As of 2008, 270 million mainland Chinese in forty-nine cities were qualified to travel to Macao as individual visitors. In 2007 Macao, which has a local population of just 500,000 residents, welcomed a record number of 14.9 million mainland Chinese visitors. According to observers, approximately 70 percent to 80 percent of Macao’s casino visitors come from mainland China although they account for about 55 percent of the total tourist arrivals.
Macao’s casino gaming revenue increased from $3.8 billion in 2003 to $10.5 billion in 2007. Although Macao is only one-fifth the size of Las Vegas in land area, it has about five times the number of gaming tables but only about 9 percent of the number of slot machines of the Las Vegas Strip. By 2006 Macao had surpassed the Las Vegas Strip as the top gaming revenue producer in the world, with $7.2 billion in gaming revenue. Analysts have predicted that Macao’s gaming revenue will reach $16 billion by 2012. Gaming taxes have contributed to more than 70 percent of the SAR government’s revenue.
The Chinese and Gambling
Chinese historical records on betting with dice and on Chinese chess matches date back to around 300 BCE. The demand for casino games is embedded in the Chinese culture, which has deep-rooted beliefs in luck and the pursuit of good luck. As one casino industry practitioner in Macao put it, “Basically, all Chinese have the gambling gene.”
These days baccarat is the most popular game. In some VIP rooms in Macao’s casinos, baccarat tables allow a bet of $250,000 per hand, whereas in Las Vegas a $150,000 maximum bet is considered extraordinary. In the United States and many other jurisdictions, the denominations of the chips are differentiated by color, but in Macao the higher the denomination, the larger the chips in physical size, which makes it possible for the mostly Chinese patrons to show off their wealth and ability to play.
Popular as casino gaming is among the Chinese, it is illegal in mainland China partly because of the conflict between the very nature of gambling and the ideology of communism, which encourages the sharing of resources and engagement in productive activities. Given the opportunity, however, the Chinese will gamble. Researchers have estimated that Chinese visitors spent $72 billion in foreign casinos in 2004.
Macao’s Hotel Industry
Macao’s hotels have benefited less from the newly mobile and better-off mainland Chinese visitor than its casinos have. The annual average occupancy rate for 2007 was 77 percent (as compared with the more than 90 percent occupancy rate that hotels in Las Vegas enjoy), with an average daily rate of less than $90. The occupancy rate for five-star hotels, however, increased from 68 percent in 2006 to 75 percent in 2007 in spite of the opening of three large new hotels. Occupancy was highest at four-star hotels, at 84 percent. Given that the average length of stay among all visitors was only 1.1 days and that 52 percent of Macao’s visitors are classified as same-day visitors, the occupancy rate is not surprising. Mainland Chinese visitors have a slightly longer length of stay (1.3 days), but they tend to stay in three- or four-star hotels and use at the gaming tables what they save on accommodations.
Macao’s gaming industry boom has also benefited Zhuhai, which is just across the border from Macao. Many of the 50 percent of mainland visitors to Macao who do not spend the night there choose to stay in Zhuhai, where accommodations are cheaper. Macao’s residents now earning higher income due to casino and related industry development are more likely to visit Zhuhai for shopping, dining, and entertainment.
Looking Ahead
Mainland Chinese visitors will continue to be important for Macao’s casinos and other tourism businesses, and gaming and tourism will continue to drive Macao’s overall economic development. But the Chinese central government’s policy toward Macao (e.g., expansion or contraction of the IVS) will determine the pace of its gaming and tourism development. Putting policy aside, proper tourism planning, infrastructure development, and human resources preparation will be of tremendous importance to Macao’s economic sustainability moving forward.
Further Reading
Gaming Inspection and Coordination Bureau. (2008). Statistics. Retrieved November 1, 2008, from http://www.dicj.gov.mo
Statistics and Census Service. (2008). Retrieved August 1, 2008, from http://www.dsec.gov.mo/Statistic.aspx
Hsu, Cathy H. C. (Ed.). (2006). Casino industry in Asia Pacific: Development, operation, and impact. New York: The Haworth Hospitality Press.
Source: Hsu, Cathy H. C.. (2009). Gambling. In Linsun Cheng, et al. (Eds.), Berkshire Encyclopedia of China, pp. 881–883. Great Barrington, MA: Berkshire Publishing.
A Harbor view of Macao, China, which was formerly a Portuguese colony. The larger hotels of Macao often feature gambling as a draw. PHOTO BY JOAN LEBOLD COHEN.
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