GGRAsia reports that Macau’s second quarter VIP baccarat gaming revenue has fallen 42.2 percent, almost $4 billion U.S., compared to last year’s earnings. Casino gross gaming revenue (GGR) overall for the first half of 2015 is 37 percent lower than the same time period in 2014, or about a $15.25 billion U.S. revenue reduction.

The continued sharp decline in Macau casino revenue is attributable to many factors including the slow down in growth of China’s stock and real estate markets, as well as the leadership-driven anti-graft campaign. Also of concern is the very high percentage of casino revenue generated almost exclusively through VIP Baccarat. Macau’s gaming bureau reported that more than 91% of casino income for the first three quarters of 2014 was through that singular game.

Macau is the only location in China where gambling is legal, and comparatively earns five times more than Las Vegas. However, revenue in Vegas is much more diversified: Only about 24% is generated through baccarat, 47% through slot machines, and the other 29% distributed throughout other gaming options.

In 2012 Chinese President and General Secretary of the Communist Party, Xi Jinping came into power and almost immediately began targeting corruption within the party, military, government administration, and state-owned companies. Since then hundreds of state officials have been investigated and prosecuted including judges, teachers, security officials and treasury executives.

Within Macau, President Xi’s anti-corruption drive has been focused on curbing the billions of dollars of illicit funds leaving mainland China and being laundered through controversial VIP junket operators generally, and several alleged triad kingpins such as Cheung Chi-tai specifically.

Since late 2014, Chinese governmental officials have been busy tightening their grips on funds transferred through China’s primary banking systems in hopes or further curtailing money laundering to Macau and Hong Kong. However government officials are also easing the rules for mainland residents to procure transit visas to and from Macau.

During a visit to Macau late last December, President Xi instructed Macau’s leadership to diversify the revenue potentials of the casinos, and to rebuild a revenue stream no longer dependent almost exclusively on VIP baccarat.

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