Beijing’s anti-corruption crackdown on Macau’s casino industry started early last year and while many expected the crackdown to stop after a couple of months, Beijing only stepped up its initiative. The scrutiny imposed by Beijing on Macau’s VIP gamblers scared them away and as a result caused Macau’s casinos to lose over $100 billion in revenue during 2014.
Beijing has also issued strict orders to Macau’s government urging them to not depend on the casino industry but to diversify their revenue markets and encourage industries that promoted education and tourism. Beijing made it clear that it wants to clean up Macau’s image of gambling and prostitution and turn it into a destination that is more family and tourist friendly.
Sonny Lo and Dennis Hui from the Hong Kong Institute of Education researchers recently published a report called ‘Casino Governance in Macau’ which makes interesting reading. A portion of this report was published in ‘China: An International Journal’ during the month of April and stated that Beijing’s efforts to crack down on corruption in Macau was understandable and long due. But the report also went on to say that Beijing also has other motives behind the anti-corruption crackdown.
The report stated that “This [request for economic diversification] is out of geopolitical concern because the central government in Beijing does not want to witness any proliferation, much less monopolization, of foreign investment in Macao’s casino industry, especially when capital from Hong Kong, Australia and America has already grown prominently in the gaming sector since 2002. Due to Macao’s over-dependence on casino capitalism, which is deemed undesirable, and China’s geopolitical concerns of deep penetration of Western capital into Macao’s casino industry, a brake on the growth of casinos and the impacts associated with a shorter term for casino franchises in the future are perfectly understandable”.
Billion dollar casino empires like Wynn Resorts, Las Vegas Sands and MGM Grand’s have also invested heavily and set up mega casino resorts in Macau. These Western establishments have also imported a large English speaking workforce to work at the casinos and as a result have not provided what Beijing may consider significant job opportunities for the locals.
These western establishments control a significant stake in Macau’s casino industry and Beijing does not want Macau to be so dependent on western interests. This anti-corruption crackdown move could very well force western establishments to rethink their strategy in Macau, thereby giving Macau a chance to start afresh.