When Beijing launched its anti corruption crackdown in February 2014 and targeted Macau’s casinos, many believed that it would be a one-off operation. As the campaign continued over the next few months, Macau’s casinos reported a significant drop in its VIP clientele who accounted for over 50% of all gambling revenue. The crackdown has continued well into 2015 and has not only resulted in huge losses for Macau’s casinos but has also significantly reduced Macau’s government gaming tax.

A recent report released by Macau’s Financial Services Bureau reveals that during the first 5 months of 2015, Macau was able to collect only $4.82 billion from direct gaming taxes. This was a drop by 35% when compared to the same period during 2014. This massive decline in gaming taxes is due to the drop in gross gaming revenue (GGR) from Macau’s casinos which have witnessed a continuous decline during the last 12 months. The GGR during the first five months of 2015 is 37% lower when compared to the same period in 2014.

Macau has the biggest casino industry in the world and is responsible for generating billions of dollars in taxes which provide Macau’s government a significant portion of its total tax revenue. Direct taxes generated by Macau’s gambling industry during first five months of 2015 resulted in 82.8% of the government’s total revenue. This is a 33.8% drop in tax revenue generation when compared to the same period in 2014.

The collapse of Macau’s casino industry has posed serious problems for Macau’s government and its citizens. The cost of living in Macau has risen considerably during the past 12 months and the decline in government revenue has posed serious challenges for the government. Macau’s government surplus is currently down by 54.9% when compared to the same period in 2015 but the surplus amount is currently around MOP 18.1 billion, which is just above the government’s revised forecast for 2015.

Macau’s government had earlier estimated that Macau’s gross monthly gaming revenue would be around MOP 27.5 billion but later revised that estimate when the market slump continued and set the standard at MOP 20 billion.

The government’s new budget is based on an estimate that average gross monthly gaming revenue will be MOP20 billion this year, down from an earlier estimate of MOP27.5 billion. Macau’s Secretary for Economy and Finance Lionel Leong Vai Tac recently stated that if the monthly GGR drops below MOP18 billion, then Macau will be forced to revise its public spending cuts.

Industry analysts have reported that Macau’s casino industry will continue to decline in 2015 and even into 2016. The anti-corruption crackdown which started as a problem for VIP gamblers soon turned into a problem for casinos and now has turned into an even bigger problem for Macau’s government. The government is currently trying to train casino workers who have been terminated and provide them with a new skill-set so that they can find employment opportunities in other industries.