The gambling capital in the world has been Macau for quite some time now, but the special administrative region of China has shown some cracks in its seemingly untouchable ceiling. The reason for the decline in gambling revenue is a result to China’s tightened laws with regards to corruption.
According to a report by the Wall Street Journal, casino revenues fell for a third straight month, this month by 3.6% compared to last year. The Macau gambling universe mostly depends on VIP gambling, which accounts for 63% of the total revenue and that segment alone took a huge 17.2% hit in July alone.
China’s anti-corruption campaign began in 2012 but recently there have been more signs that the current government is serious about coming down hard on individuals who cheat the system. VIP junket operators had no idea the crackdown would be this bad and it seems like the growth of Macau has been stalled for now.
All the high limit gaming in Macau is done in junkets where middlemen offer rich Chinese a way to gamble on credit. Gambling debts are being settled afterwards and the junkets take a cut of the profits for settling these debts. The reason for this system is as following, China limits the amount of money an individual can take across the border, but because the players play on credit in Macau this has no effect. Debts are settled afterwards and therefor large sums don’t have to cross the border.
Something Las Vegas has always gained its most profit from, low limit gamblers, will now also become more prominent in Macau. WSJ reports that Sands Corp will cut its Macau VIP tables by 28% to open up more space for the mass-market players.