All is Not Well on the Island of Macau
According to statements from the island’s Secretary for Economy and Finance Lionel Leong Vai Tac, as reported by CalvinAyre.com, casino revenue for June could fall as low as $2 billion. While that’s still a pretty impressive number, it would represent a dip of nearly 25% over last month.
Unfortunately, for Macau’s casino operators, the last two months are part of a disturbing downward spiral that’s having a big impact day-to-day life in the Vegas of the East. With casino tax revenues bottoming out, the island’s government is scrambling to fill holes in its budget, while still providing basic social services.
Macau’s gambling problems looks even worse when you consider that the Galaxy Macau’s Phase 2 just opened last month. The Galaxy was the first massive new casino to open up there in nearly three years. So far, revenue at the mega-resort has been what company officials call, “satisfactory.”
So what’s behind the Macau crash? A big part of the problem stems from a crackdown on corruption, VIP on Mainland China.
That’s resulted in plenty of wealthy factory managers, government officials and other Chinese “new rich” either facing prison sentences, or being a bit more discrete with how they spend their cash.
Though some sources say that a May/June slump is pretty typical for Macau others, including Forbes say that administrative changes in how visas are handed out in China, as well Macau’s failure to diversify its economy, are behind the slump.
The lesson here, apparently, is that catering a gambling resort to a small group of Chinese high rollers is not an effective, long-term strategy.