Bright lights, slot machines, poker, blackjack…. Our minds have probably all just travelled to Las Vegas. The city of sin… the place everyone thinks of when we think of gambling. And that’s because it’s the world capital of gambling, right?! Well, it´s not!
Because the world’s real leading city of gambling is not Las Vegas… but Macau. Macau is an autonomous city situated in the south of China, very close to Hong Kong. It’s so close to Hong Kong in fact that the normal way to get to Macau is by very fast ferries which connect the cities in just over than an hour. Macao is a curious city.
On the one hand, it is a small piece of Portugal inside the chaotic and vibrant Asian south-west. On the other hand, it is a place where skyscrapers and bold modern architecture are easy to find. The city’s landscape is dominated by an enormous skyscraper with colourful crystals in the shape of lotus flowers: the Grand Lisboa Casino.
Above all though, it is quite a messy city, it’s all rather ramshackle and full of little streets. Macau was the last European colony in continental Asia and it remained so until very recent times. For centuries it was part of Portugal and at the end of 1999 it was integrated in China.
It was set up as a special administrative region which allows for a “one country, two systems” set up. These two cities (Hong Kong and Macau), even though they belong to China, they keep (with some limitations) their own legislation, customs, courts, currency and political institutions. In practical terms, they really work as if they were different countries. In Macau, Portuguese is even an official language. But really Macau could be more considered a gambling theme park than a city. Every year it receives more than 30 million tourists.
Yes, this tiny piece of land is one of the world’s most visited places… Why? Because it is the only place where gambling is permitted in China. Thanks to this, since its integration into China up until 2014, this region has one of the fastest periods of economic growth in history. In little more than ten years, its GDP multiplied by 10, growing from $5 billion to $55 billion. There was a key moment in this rapid growth process: it was when the local government gave the gambling industry free rein. In this very moment, huge multinational corporations in the gambling industry rushed to establish themselves there, transforming Macau´s identity forever.
Today the city is known as the “Chinese Las Vegas” for its high concentration of casinos, but this is a ridiculous term. Dear viewers… Macau is far far more than Las Vegas. In Macau’s 40 plus casinos, $29 billion were invoiced in 2015, which is almost five times more than Vegas. And guess what? In 2013, it reached the astonishing amount of $45 billion, which is almost the same amount of money France receives from its entire tourism industry.
It is quite amazing. Gambling, lights, luxury shops, and, well, still more lights…that´s Macau’s new, and growing, identity. So, now you know! From now on, every time you think of a slot machine, poker or blackjack table, don´t think of Monte Carlo or Vegas, think of Macau.
And there is no slowing down. Three new mega casinos, the result of multi-million dollar investments have opened in the last twelve months alone. At the end of 2015 the “Studio City” hotel and casino was opened. This is a huge complex with a Hollywood atmosphere whose opening saw the production of the most expensive short film in history with a budget of more than $70 million. It was directed by Martin Scorsese with important lead roles played by Robert de Niro, Leonardo DiCaprio and Brad Pitt.
What other hotel opening could possibly compare to this? More recently, in August 2016, the Wynn Palace opened its doors. A luxurious hotel with more than 1,700 rooms which cost its developers $4.2 billion dollars. The most recent and the last to open has been “The Parisian”, a new masterpiece by Las Vegas Sands (the company belonging to wealthy investor Sheldon Adelson). This new complex is almost a city in itself with 3000 rooms, a water park and, even, its very own Eiffel Tower.
And the openings still continue, the next to open will be “The 13”, the most expensive super hotel in the world. Some of its rooms will cost between $50,000 and $100,000 dollars per night. No, this isn’t a mistake.
Its guests will even have 30 Rolls Royce available for them. Although they should be gifts for the guests, given the prices. Along with these new hotel casinos, the most legendary in Macau are: The Galaxy, Grand Lisboa, The City of Dreams, The Venetian, the MGM, and many more.
If they keep this up, the Strip in Las Vegas will soon look like the work of an amateur. In Macau, more than 80% of governmental income comes from casinos and the money the government gets is so abundant that, every year, it has an enormous budget surplus. They are completely unfamiliar to the idea of a public deficit, and, as you can imagine, this means taxes are low. So, now you might be wondering: What does the government do with all the surplus they obtain every year? Well, part of it is invested in infrastructure, and a third of it is… wait for it… shared as dividends among the city residents.
Yes, again, no mistake here. Since 2008, all the city’s inhabitants have received part of the profit that the government gets from its casinos. For example, this year, the dividend was $1000 dollars per citizen…. That means, for a family of four, they are getting a check for $4000 dollars every single year. Not bad ay?
And these are not the only benefits the citizens receive – nearly one in every four jobs depends on the casino industry. So, low taxes, high employment rates, and, on top of that, shared dividends. Pretty sweet. However, not everything is sunshine, lollipops and rainbows. Most tourists in Macau, around two thirds, come from continental China so the economy in this region is closely connected to China’s economy.
And if this wasn’t enough, Xi Jinping, the President of China, started a war against public worker corruption in 2015. At that time, the economy of Macau collapsed. In a single year, gambling income fell by 40%, leading to the economy in Macau losing more than 20% of its GDP. The corrupt public workers in China had grown accustomed to Macau’s casinos.
They could spend their ill-gotten money quite easily, and spend time at red-carpet like events and, even, if lucky enough, they could do some laundry… of the money variety. It’s not as if the whole industry depends completely on them… But add in the Chinese economic slowdown and the new controls established by the Chinese government, and many of these VIP’s who used to go Macau have stopped doing so… at least for a little while. And well, half of Macau’s economy depends directly on casinos. But, thanks to numerous investments, the good condition of public finance, and the advantage of being such an important tourist cluster, both the social and economic effects have been limited. The government keeps a comfortable surplus, the unemployment rate is only 1.8% and family incomes have not suffered.
But one thing is true: As Xi Jinping said it his last visit to the city, it is time for diversification, and the government has already presented a plan to tackle this. Macao will bet on family tourism, health tourism, finance and the technological industry in the next few years. This economy has already started to bounce back.
If the government’s plans become a reality, Macau might become some kind of 21st Century Monaco in a few years. The city’s mistake was to put all eggs in the one basket, leaving it too reliant on one industry; instead of making it easy for companies to form and attracting investment from different industries. Something which happened in Atlantic City, although with more serious consequences.
But that’s for another video… What did you think about Macau? If you want us to keep discussing Asia, don´t forget to click like on this video to let us know. And if you haven’t subscribed to our channel, do it now clicking the button on the screen and you’ll know each time we release a new video. See you next time!