Beijing’s anti-corruption campaign against VIP gamblers in Macau over an extended period of time has been successful as these VIP gamblers have decided to stop frequenting Macau’s casinos and instead take their business to neighboring countries like the Philippines, South Korea and Vietnam where the gambling laws are much more lenient.
These VIP gamblers once accounted for more than 60% of business generated by the casinos. Most of these VIP gamblers are suspected to have gained a significant portion of their wealth through corrupt means and have been on the radar of the authorities. Macau’s casinos have now been forced to change their strategy and target everyday gamblers who are happy to visit but can only spend small sums of money.
Macau’s casinos reportedly lost over $100 billion in 2014 and continue to lose money in 2015 as these mass market gamblers do not have disposable funds to play at the casino. Deutsche Bank AG analyzed Macau’s declining gambling industry and stated that this dip in revenue would continue for the next few years. Macau’s government has decided to change its image from being known as the gambling hub of the world to become a “world centre of tourism and leisure”.
Yet tourism has also been affected by the anti-corruption crackdown as tourists from the mainland have decided to stay away from Macau. In a statement, Karen Tang of Deutsche Bank AG said “Not only is spend per visitor falling, Macau’s visitor arrivals had also fallen 4 percent year-on-year in the first quarter of 2015, [the] worst decline since [mainland] visa restrictions in 2008-09. Disappointingly, the weakness was most pronounced for overnight visitors (-10 percent year-on-year).”
The president and chief operating officer of Las Vegas Sands Corp Rob Goldstein who is also acting as the interim president of its Macau Sands Casino believes that there is a direct correlation between the numbers of tourists visiting a casino-hotel and how much is spent on gaming and in-house entertainment.
If the number of tourists and VIP gamblers to Macau continues to decline, then Macau’s casinos will suffer significant losses and find it hard to stay afloat. Gaming analysts believe that the new strategy of targeting mass gamblers and making casinos more family friendly will not be able to bring in anywhere near the revenues like before. Gaming spend per visitor has fallen by 14% during the 1st quarter of 2015 when compared to the same period in 2014.