Macau — Gambling Capital of the World

What comes to mind as soon as you hear the phrase “gambling capital of the world”? Although everyone thinks of the neon-lit city tucked away in the Nevada desert (Las Vegas), the one and only holder of the title is Macau.

Interestingly, Macau wasn’t called the capital of anything for a long time, and outsiders from the west often referred to the city as Asia’s Monte Carlo, the first European casino, or simply the Las Vegas of the East, but that happened in the 20th century. Today, none of these descriptions do Macau justice because, without a doubt, it’s the world’s gambling capital.

Doubtless, Macau hasn’t always been the gambling hub it is today. Its transformation began in the 1960s when Stanley Ho, one of the gambling patrons, created the perfect environment for casinos to develop into a multibillion-dollar industry.


How Did Macau Become the Gambling Capital of the World?

During the Portuguese rule of Macau in 1840, local administrators sought additional sources of revenue to bolster the king’s coffers. Under a new decree, gambling houses were among the approved activities to secure additional money.

According to Camilo Pessanha, a Portuguese poet who lived in Macau at the time, the little backward settlement morphed quickly into a “material and moral rubbish heap.” There was no glitz or kitsch like there is now.

Nevertheless, Hong Kong and southern China residents already found the appeal too hard to resist in the 19th century. In the rainy season, immigrants started flocking across the border, and the Portuguese king’s coffers quickly filled up.

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How Did Stanley Ho Build Macau?

Turning a morally dubious city into the world’s gambling capital was no easy task. Although not entirely, the first modern-day casinos began to form in the 1920s.

After Stanley Ho’s syndicate obtained a gaming monopoly license in the 60s, the so-called Macau casino barons were defeated. As a result, Ho established the Sociedade de Turismo e Diversões de Macau (STDM).

Even though, by the time Ho passed away, the grandfather of the city’s gambling industry owned around one-third of the industry. Although he left without a bang, two of his children were caught in internal strife.


The Entrance to China

Although Stanley Ho established Macau as the world’s gambling capital, it wasn’t until China took the region under its wing under the “one country, two systems” formula that gang violence was curbed, which had spiraled out of control under Portugal’s neglect. Powerful criminal groups began arm-wrestling for power as Portugal withdrew from the region and prepared to hand over the territory to China.

Street fights broke out between gang members across the city as bombs and killings went off. Broken Tooth, the leader of one triad, was ruthless in enforcing his supremacy over rival gangs and ordinary citizens.

However, China had other plans. When Portugal officially handed over the reins in 1999, it sent a clear message by marching its army through the center of town and announcing that all gang violence would cease immediately. Macau was the first and last colony of the Europeans in China. As a result of clamping down on violence and arresting Broken Tooth and his lieutenants, the gambling industry began to flourish again.


China’s Control Turned a New Page

China may be gung-ho against gambling, prosecuting it at home and across its border, but Macau represented an opportunity to try something different. There was a lot of black-market gambling in China, so the country decided to channel this demand to Macau.

As part of its commitment to liberalizing the market and allowing foreign investment into Macau, China pledged to make it the world’s gambling capital. Various big brands began trickling in from across the Pacific Ocean, bringing their expertise in running and building casinos and drawing inspiration from the local culture. Brands that set up shop include:

  • Wynn
  • MGM
  • Las Vegas Sands
  • Caesars Entertainment

In addition, tourists from across the border with China began trickling in rapidly. The Statistics and Census Service (DSEC) reports that Macau welcomed 39,406,181 visitors in 2019. The number of visitors increased significantly from 2001 when fewer than a million people visited.

Due to China’s economic rise, many well-off Chinese can afford to travel and indulge in expensive leisure activities such as gambling. Therefore, brands began replicating European and American cities to encourage interest in the East.

To date, Venetian Macau remains the world’s largest casino, second only to WinStar World Casino in Oklahoma. In addition to 3,400 slot machines, there are 800 gambling tables at the venue, which covers 546,000 square feet. There are other famous gambling cities in the world whose popularity increased over the years.


What Does the Macau Gambling Experience Involve?

Known as the world’s gambling capital, Macau offers a gaming experience unmatched by most other gaming hubs. You’ll often find yourself in Macau’s casinos, visiting rich, cavernous, and brightly illuminated royal venues with fountains embedded in the center and chandeliers dangling treacherously overhead with thousands of tiny lights.

Incandescent spurts of color emanate from model volcanoes. Regarding actual gambling, however, that’s just the beginning. In Macau, there are over 41 casinos with slots, table games, and private VIP rooms reserved for the most well-connected gamblers. Venetian Macau has 3,000 rooms and one of the most expansive gaming floors in the city. Cotai Arena, the casino’s indoor venue, has hosted all kinds of entertainment spectacles over its long history.

The Chinese New Year is a particularly conducive time for gamblers to cross the border between Hong Kong and China to play baccarat tables, blackjack, and craps, which are the most popular gambling games among Asians. Western gambling revolves around penny-pinching slots, whereas Macau focuses exclusively on real money games.

Casino players are welcome at:

  • City of Dreams
  • Altira
  • Sands Macao
  • Galaxy Casino
  • Wynn
  • Starworld
  • MGM Grand
  • Rio Hotel and Casino
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International Investment in Macau

Casinos are one of the biggest sources of income for the Chinese government. For example, Macau collected 40% of its taxes from gambling-related income in 2001, which grew to 81% of all taxes collected in 2011. Investing in Chinese properties and competing for casino licenses was the reason behind this massive change.

In the past, the only company with a license to operate casinos was Sociedade de Turismo e Diversões de Macau, SA (STDM). However, since 2002, several multinational firms and joint ventures have been granted licenses to operate casinos. The project attracted companies worldwide, including several Las Vegas properties, including MGM, Galaxy, Las Vegas Sands, and Wynn Resorts. Several corporations invested heavily in Macau’s new casino resorts, with luxury as the deciding factor.

To complete all these construction projects, land was needed. In addition, land reclamation projects were required since Macau was originally only a peninsula and a few islands. Macau had grown from 11.6 square kilometers in 1990 to 29.7 square kilometers in 2010. The new land that connects Taipa and Coloane is home to these large casino resorts.


Revenue from Macau’s Casinos

Locals have plenty of job opportunities thanks to the new casinos. As a result, this has had a significant impact. Tourism and high tax revenue are the main benefactors of Macau’s economy.

Namely, the amount of taxes generated from gambling revenues in Macau peaked in 2014 before Xi Jinping, the president of China, declared an anti-corruption campaign. The Chinese government views Macau’s VIP rooms as one of the biggest capital leaks from the local economy. Macau’s casinos make a lot of money by having gamblers deposit their money in mainland China before junket companies advance their money to the VIP rooms.

Players often gamble with huge credit lines, meaning VIPs generated a lot of money in casinos through corruption on the mainland.

  • 84% of the Macau government’s revenue was generated by gaming tax revenue in 2014.
  • During 2017, the revenue decreased to 79%.
  • In 2014, taxes generated $20.1 billion.
  • In 2017, they generated $15.7 billion.

As a result of President Xi’s anti-corruption campaign, several Chinese elites avoided Macau’s casinos. Consequently, Macau makes less money from VIPs and has turned towards the general public, stabilizing casino revenue. Macau hosts events and exhibitions as part of Beijing’s efforts to attract new customers. Moreover, with a direct connection to Hong Kong, Macau is now easier to reach. Nevertheless, due to diversification, Macau must compete with international casinos for business.

Xi’s anti-corruption campaign has also encouraged Chinese gamblers to travel across Asia, such as to Singapore and the Philippines. Despite this, Macau remains the gambling capital of the world, where the local economy benefits greatly from it and the residents’ wealth.