Macau Casino’s Suffer Over $100 Billion In Losses During 2014

Macau gained popularity only after establishing itself as the biggest gambling hub in the world, surpassing the revenue of Casinos in Las Vegas and become a star attraction for gambling companies across the world.

Macau, located between Hong Kong and Mainland China has done exceptionally well during the last 5 years but has experienced a significant drop in casino revenue during 2014.

One of the main reasons for the significant drop in casino revenues has been because of the crackdown imposed by mainland China. The Chinese government has been monitoring all casinos in Macau to curb money laundering, racketeering and trace the source of high value financial transactions. This crackdown has scared most of the big spenders away and Chinese nationals are no longer willing to leave the mainland to visit Macau casinos. This along with the political protests in Hong Kong has resulted in a significant drop of casino visitors and revenue in Macau.

Financial analysts have predicted that 6 casinos in Macau have lost a total of $100 billion in the stock market during 2014. These huge losses have burnt Macau casino owners and investors like Sheldon Adelson, Stanley Ho and James Packer. Macau’s Melco Crown casino which is partly owned by James Packer lost an estimated $HK61 billion.

Towards the end of 2014, Chinese President Xi Jingping told Macau government authorities that China would continue to crackdown on corruption and Macau will have to ensure that its casinos meet all the regulations. The President has asked the Macau government to not bank on the casino industry to be its number one income source but to develop education and entrepreneurship so that Macau’s citizens have more alternatives in choosing a career and making a living.

Macau authorities will find it hard to cope with these new demands by President Xi Jingping as it will take them a number of years to implement these measures and change Macau’s image of being a gamblers paradise. Praveen Choudhary, an analyst from Morgan Stanley believers the market in Macau will have a 4% fall in 2015 and then rise by 10% in 2016. In a statement, Choudhary said

We see mass revenue, including slots, to remain flat in 2015, before growing 18 per cent in 2016, fuelled mainly by new hotel rooms and steady growth in spending per capita

There are a number of casinos currently being constructed in Macau as gambling investors believe that China will ease up on his anti corruption campaign in an effort to revive Macau’s gambling fortunes.