Casino Industry in Macau

Topics: Gambling, Gambling in Macau, Casino game Pages: 8 (2728 words) Published: October 8, 2012
The Casino Industry in Macau

Research Question
I intend to evaluate the Casino Industry in Macau including the reasons for its high demand and growing success and compare it to the Casino Industry in Las Vegas. The gaming industry is the livelihood of Macau. It is responsible for 75% of the government’s income and provides the people of Macau with millions of jobs. Even though gambling was first legalized under Portuguese rule to finance the government, it remains the same under Chinese rule today. The rules and regulations set forth oversee the casino industry and grant companies with casino concessions. It is dramatically more profitable than Las Vegas because of the devastating effects of the American Recession.

Gambling in Macau has been legal since the 1850’s, although it had existed illegally long before that. It has become a major source of income for the country and can be attributed to the increasing number of tourist visits. The gambling industry in Macau is the country’s number one reason for its economic success. Due to its achievements in the gaming industry, Macau is known as the “Monte Carlo of the Orient” and is Asia’s richest territory (“Booming”). Casino table games are the main form of gambling in Macau. The other two most popular forms are horseracing and greyhound racing. Some other forms of gambling are becoming increasingly popular such as lotteries and sports betting.

Background and History
Gambling was legalized in 1847 in an attempt to generate revenue. At the time, Macau was under control of the Portuguese. The government issued a licensing system for the Chinese “gambling houses”. Each “house” was given a license only if they gave money to the government in return. This was in the form of taxes on the revenues of each house. While gambling is normally something a government at that time would not condone, the current state of the economy called for desperate measures (“Gambling in Macau”). In 1937, the first casino monopoly concession was granted. It was given to the Tai Xing Company. This company, however, was very conservative. Because of this, they were unable to fully supply the people with the high demand that the gaming industry had to offer in Macau. The company lacked the ability to generate enough money to meet the markets potential. The casino monopoly concession for the Tai Xing Company was soon revoked (Loughlin and Pannell). In 1962, the monopoly concession was given to the Sociedade de Turismo e Diverseos de Macau (STDM). Stanley Ho and his family founded the company. In English, it translates to Macau Tourism and Amusement Company. The STDM’s acquisition of the license for the monopoly marked a revolutionary turning point in the casino industry in Macau. Soon after gaining control, STDM introduced many western-style games to the casino industry. It also renovated and updated the oceanic transport between Hong Kong and Macau. This allowed millions of Hong Kong citizens to travel to Macau and gamble. It dramatically increased the revenue of the gaming industry and improved the economy of Macau (“The Gaming Industry”). STDM was taxed 31.8% of their total profit. This accounted for 50% of the government’s annual income. It also accounted for 33% of the country’s Gross Domestic Product (GDP) (Loughlin and Clinton). The government extended STDM’s license in 1986. In 1999, Macau became independent from Portugal and joined the People’s Republic of China. Eventhough the Chinese are strict and would usually not allow gambling, they understood Macau’s dependence on its gaming sector and also their own dependence on the profits they received from this industry. The new government did not make any changes to its gambling policy. STDM’s license extension, however, recently expired in 2001. The government decided to cease operating the gaming industry as a monopoly. While some believed that STDM was too powerful, the government decided making the industry a free...
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