Macau Gaming Industry

Macau’s gaming industry consists of casino gambling, gambling on riverboats, cruises, lotteries, sports betting pools, legal sports betting, wagering on horses or greyhound races and wagering over the Internet. This analysis on Macau’s gaming industry will focus on the first two types of gaming.

In 2000, Macau’s Chief Executive Edmund Ho announced plans to liberalize the gaming sector when the current casino monopoly expires at the end of 2001. His plans were supported by President Jiang Zemin who noted that the Macau SAR government was capable of managing the issue of liberalization of the gaming industry.

Casino monopoly taxation generated 60.6 percent of the Government’s total recurrent revenue in 2002.

The tax payment corresponds to 31.8 percent of the casino monopoly’s gross proceeds. Gaming businesses and the tourism industry generated approximately 40 percent of Macau’s GDP in 2002.

The previous casino monopoly was granted to Dr. Stanley Ho’s Sociedade de Turismo e Diversoes de Macau by Macau’s pre-handover Portuguese administration in 1962. STDM, which employs over 10,000 people (corresponding to about five percent of Macau’s workforce), operates 10 casinos in Macau. Companies associated with STDM run greyhound and thoroughbred races, as well as a host of lotteries, soccer and basketball betting pools.

STDM continues to be a ‘main player’ in Macau’s gaming sector due to its long-term presence in Macau, its gaming expertise and its involvement in the Entertainment Wharf project (which will include gambling venues). STDM and a local property developer jointly planned this US $100 million project, titled Fisherman’s Wharf.

The Macau Government has approved this project and construction will start later in the year. According to preliminary plans, the project will occupy 100,000 square meters and will include gambling venues, a man-made volcano that will spew artificial lava, theme restaurants and bars, a souvenirs shopping center, a disco, a mock medieval castle and a Chinese fishing village.

Macau Casino Gaming Market Profile

The market size of Macau’s gaming industry can be gauged by gross proceeds of STDM, which holds the casino monopoly franchise until the end of 2002.

STDM recorded gross proceeds (most coming from the 10 casinos) of US$2.1 billion in 2000, an increase of 21 percent over 1999. The rise can be attributed to the 23.2 percent increase in visitor arrivals in 2000 compared to 1999, which was driven by the rebound in the regional economy and a reduction of violent gang activity after Macau’s handover.

Of the 9.2 million visitor arrivals, about three-quarters of all visitor arrivals, as estimated by casino executives, came primarily for casino gambling and betting.

It is also worth noting that STDM launched an online casino earlier this year. The DrHo.com Web site is a real-time gaming site on which gamblers can lay bets on roulette, and be dealt cards by cyber-croupiers for blackjack, baccarat and Caribbean poker.

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Industry experts believe that the future growth of Macau’s gaming industry will be driven by Mainland Chinese tourists. Following are observations gleaned from industry experts:

- China prohibits casino gambling and mainland Chinese tourists are more frequently visiting Macau~ s casinos. The Shanghai Fengcai Lottery went online in June 2000, with approximately 1,500 terminals installed initially. Automated Wagering International (Atlanta, Georgia) supplied the central system for the lottery.

- Mainland Chinese comprised 24.8 percent of the 9.2 million visitors to Macau in 2000, while Hong Kong visitors represented 54 percent of total visitors.

The Macau Tourism Office noted the possibility of setting up representative offices in major Chinese cities to promote Macau.

Source: Macau 2004 Business Guide

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