Macau’s casinos have had their chips as China cracks down

Gambling has enriched the city but Beijing is angered by the region’s reliance on the mainland for revenue

MACAU’S winning streak may be over as Beijing cracks down on the gambling hub as part of a morality drive and officials put a key figure from its highly profitable casino industry behind bars.

The semi-autonomous region is the only place in China where gambling is legal. In pre-pandemic 2019, it raked in nearly £28billion from its casinos – six times what Las Vegas made that year.

Macau consistently boasts one of the highest GDP per capita in the world and each citizen receives the equivalent of about £1,000 in cash from the government every year as part of a wealth distribution scheme.

However, Beijing believes that Macau has become too dependent on the gambling industry, which contributes about 70 per cent to its annual GDP, and is stepping in to curb it.

Last month’s arrest of Alvin Chau, the founder of Macau’s largest junket group Suncity, comes as the Chinese Communist Party (CCP) attempts to assert dominance over Macau’s economy.

It is trying to eradicate what it deems as immoral and undesirable activities all over the region, ranging from limiting how much money real estate developers can borrow to banning effeminate male characters in video games.

The CCP’s goal is to diversify the city’s economy beyond gambling and develop its reputation as a general “tourism” destination to see its Portuguese-style cobbled streets. It was a colony of Portugal until 1999.

Ben Lee, managing partner of IGamiX Management & Consulting, said: “It is obvious that China has had enough of Macau’s gaming industry and its reliance on the mainland for the bulk of its revenue.”

The central government could also have other objectives for tightening control in the region.

Gambling in Macau has long been seen as a way for people to get their money out of the mainland – an undesirable side effect of the business for Xi Jinping, the Chinese ruler.

Mr Chau was arrested by local authorities along with 10 other suspects last month over allegations of money laundering and organised crime.

Mr Chau’s detention by Macau police came shortly after the Chinese city of Wenzhou issued an arrest warrant for him, accusing the 47-year-old of overseeing an underground betting ring involving over 80,000 members in the mainland, where gambling is banned.

He resigned as Suncity’s CEO after his arrest, which sent shockwaves through the city’s gambling industry. Macau police said that Mr Chau has admitted to illicit betting activity but there is no word about the other charges. He is currently awaiting trial.

Share prices of casino operators have tanked in the Hong Kong Stock Exchange since the arrests, showing market fears that Macau’s best days may be behind it.

‘It is obvious that China has had enough of Macau’s gaming industry’