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| Xi says it's time for the shifting Sands. |
By now everyone is aware that Macau is by far the world's largest gambling destination, dwarfing Las Vegas in terms of gaming revenues. Las Vegas only
earns one-seventh of its revenues at this point. Yet, for all this success in attracting gamblers--high-rollers especially--there are downsides. The recent crackdown on PRC officialdom using state funds to gamble in Macau, initiated by President Xi Jinping, has resulted in a rather severe deterioration in the fortunes of casino operators in Macau? How severe, you ask? Try wiping out
$75 billion in market capitalization, for starters:
Xi, who arrived today to mark the 15th anniversary of the former Portuguese enclave’s return to Chinese rule, is the man responsible for the two-year campaign against corruption in China, scaring away high rollers who have helped make Macau the world’s largest casino gambling hub and wiping out $75 billion of casino operators’ market value -- bigger than the entire economy of Luxembourg.
Macau, half of the size of Manhattan and the only place in China where casinos are legal, is viewed as a conduit for officials and businessmen to bypass currency controls and send money out of the mainland to safer havens. While anti-graft campaigns have been short-lived in the past, Xi is stepping up the effort in a bid to bolster the legitimacy of the ruling Communist Party.
“It’s more important for China’s government to see Macau in a healthy economic development, and the reliance on corrupted official gamblers is not healthy,” said Chen Guanghan, deputy director of the Chinese Association of Hong Kong and Macau Studies, a policy research institute backed by China’s government.
So, having long since surpassed Las Vegas in terms of gaming revenues, PRC leaders seemingly concede that much of Macau's recent gains have come from "the reliance on [PRC] corrupted official gamblers." In a case of do as I say and not what I do--the mainland certainly hasn't moved past manufacturing as its main source of growth--the likes of President Xi are telling Macau to
diversify its sources of revenue. In other words, instead of pitying Las Vegas, Macau should be more like the US destination in gaining business from shows, sporting events and so on:
Chinese President Xi Jinping on Saturday urged the world's biggest gambling hub, Macau, to accelerate diversification away from its bread-and-butter casino industry... "It is important for Macau to adopt a global, nationwide, future-oriented and long-term perspective, formulate appropriate plans and blueprints for its development and promote sound economic and social development," Xi said, in comments carried on Chinese state television.
"Focus on building a global tourism and leisure centre ... promote the Macanese economy's appropriate diversification and sustainable development. This is of great importance for the interests of the people of Macau."
Although he didn't mention casinos by name, what Macau should "diversify" from is plenty obvious. Nor does he acknowledge how his crackdown has imparted a sense of the PRC acting as Big Brother watching over the big spenders:
Xi's visit comes as Macau has been battered by his pervasive anti-corruption campaign, with revenues for 2014 expected to drop for the first time since casinos were liberalised over a decade ago. High-roller gamblers have increasingly steered clear of Macau, on the mouth of the Pearl River delta, unnerved by the increased scrutiny of the gaming industry as Xi's anti-graft drive shows no signs of let-up.
Hence Cirque de Soleil
shows and Manny Pacquiao
fights in Macau. While these sorts of marquee entertainment and sporting events have begun coming to Macau, it will need a lot more of them to wean Macau away from reliance mostly on gaming. In this respect Las Vegas is actually still way ahead of the game with its
busy calendar for hosting business conventions and the like. Make no mistake: Macau still has catching up to do with Las Vegas in terms of becoming a well-rounded and, yes,
diversified destination for business and leisure travelers.
