Macau, which has become Asia’s gambling center with the arrival of several Las Vegas casino operators, is headed for a fall, according to The Economist magazine.
Though gambling revenues are at an all-time, year-on-year high, new legislation passed by the Chinese government as well as the overall global financial situation is already putting a bite into those revenues.
Figures show that growth in the city’s gambling industry has slowed this year, owing principally to factory closings in southern China, which has had a negative effect on discretionary income.
Moreover, Beijing has effectively restricted China’s wealthiest gamblers from traveling to Macau by changing visa rules.
Before June, mainland residents could travel to Macau twice a month, but now they are allowed to go there only once every two months. In addition, transit to Macau via Hong Kong is now prohibited.
Many casino operators are just now finishing up construction of new facilities in Macau, which means the downturn couldn’t have come at a worse time.
These operators are still deeply in debt and their share prices have gone south as the global credit crunch spreads.
Some operators may have to consolidate with healthier rivals. The one bright spot in this picture, according to The Economist, is the Venetian, which has become a prime “conference destination.”
Macau has also become a place where people in southern China go to attend rock concerts and sporting events.
Though the new visa restrictions may reflect the Chinese government’s desire to crack down on casinos, especially those run by foreign companies, the government surely doesn’t want those casinos to move elsewhere, in particular to rival Singapore, which is funding a huge new gambling and conference complex.