The first thing that pops into everyone’s mind when they hear ‘Macau’ is casinos. Lavish casinos, dozens of them, spread across the special administrative region. Some of them are true architectural masterpieces, others are more modest in appearance, but yet serving the same purpose – to appease players’ gambling tooth.
Macau has turned into a gambling mecca, drawing visitors from China, the Asia-Pacific region, and the rest of the world. It was first proclaimed as Asia’s largest gambling hub. It continued to gain popularity over the years until it gradually replaced Las Vegas as the highest grossing jurisdiction with a significant concentration of casinos on its territory.
However, things were not that bright for Macau and its casino industry in the period between mid-2014 and mid-2016. The city’s gambling market experienced its worst downturn ever, posting sometimes double-digit declines in monthly gross gaming revenue. Being highly dependent on its gambling industry, Macau’s overall economy suffered terribly from the continued downward trend.
What brought the massive revenue declines? How did the administrative region address the issue? And what did Macau’s government and casino operators do to revitalize the industry? This article intends to provide possible answers to the above questions.
The Formation of Macau’s Modern-Day Casino Industry
Up until the late 1990’s, Macau’s gambling venues were run by a government-selected monopoly. The monopoly system was established in the 1960 and a company founded by casino mogul Stanley Ho and co-founders Henry Fok, Terry Ip Tak Lei, and Ip Hon held it over time.
The monopoly system was retained up until 1999, when the city made first steps towards the establishment of its casino industry into its modern state. Formerly a Portuguese colony, Macau was made a Special Administrative Region of China in late 1999. The city’s government announced immediately that a new gambling system would be created, one that would allow three concessionaires to operate casinos across the city.
A comprehensive bidding process was then held and it was in early 2002 when it was announced that Sociedade de Jogos de Macau, the Stanley Ho-founded company, Galaxy Casino S.A., and Wynn Resorts were the three winning bidders. The three companies were then allowed to establish sub-concession relationships with other three interested businesses. Thus, Venetians Macao S.A. (now Sands China), MGM Grand Paradise, S.A. (now MGM China Holdings), and Melco PBL Jogos (now Melco Crown Entertainment) entered the local market.
OVERVIEW OF CASINO ENTERTAINMENT 4 Note: Commercial casino states are shaded in green. Sources: American Gaming Association, Bureau of Indian Affairs, State Gaming Commissions 1Casinos in Illinois, Indiana, Louisiana, Mississippi and Missouri have no cruising requirements; casinos in Iowa have limited cruising requirements.
Macau’s casino industry grew from a MOP46.05-billion one in 2005, when the city’s Gaming Inspection and Coordination Bureau posted its first comprehensive financial report, into a MOP360.75-billion one in 2013. In other words, 2013 was the year when the administrative region posted its highest gross gaming revenue or revenue generated at its casinos.
Such a substantial growth was only expected to continue in the years to come. However, something seemed to have gone terribly wrong for Macau as casino revenue started declining in mid-2014 and maintained a downward trend for the next two years.
What Went Wrong for Macau’s Casino Industry?
Chinese President Xi Jinping stepped into office in March 2013. From the very early stages of his tenure, the country’s top official swore to curb various issues that he believed were preventing his country from growing economically. With that came his war on the illicit outflow of money from China.
Given the fact that money is something that has been flowing around Macau in great quantities, it was not a surprise that the gambling mecca was quickly involved in President Jinping’s efforts. High profile politicians and other public figures, who had frequented Macau, suddenly became among the subjects of an unprecedented in its scope crackdown.
Here it is important to note that Mainland China players have always represented an important gambling group for Macau’s casinos. Known for their deep pockets and willingness to spend more on different types of table games, they have become probably the largest contributors to local casinos’ turnover.
As a result from President Jinping’s clampdown, Chinese high roller players began steering away from the city and averting their attention to other gambling destinations in the Asia-Pacific region. This hit the financial performance of Macau’s casinos in a manner never seen before.
The city’s big problems began from June 2014 when it posted its first monthly casino revenue drop for a while. It was a modest drop of 3.7%, but it was enough to signal that something might go terribly wrong. Indeed, the situation started growing worse with each month passing.
A Quick Look at Macau’s Gross Gaming Revenue in 2014-2016
Macau posted its first full-year revenue drop for the twelve months ended December 31, 2014. It generated the total amount of MOP351.52 billion during the period, down 2.6% from MOP360.75 billion in 2013.
Back then, analysts’ forecasts were that Macau’s casino industry would shrink even further. These proved to be right. The amount of MOP230.84 billion was generated in casino revenue in 2015, reflecting a massive 34.3% decline from the previous year.
The downward trend was maintained until July 2016, when the last monthly drop in casino revenue was reported. Clear signs of recovery could be seen from February 2016, when Macau’s gambling regulator posted only a 0.1% decrease in revenue. February is traditionally a busy month for the administrative region due to the Chinese New Year’s celebrations. Visits to the city and its casinos usually increase significantly during that time of the year.
| Monthly Gross Gaming Revenue: 2016 (MOP billion) | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2016 | 2015 | Change | ||||||
| January | 18.67 | 23.75 | -21.4% | |||||
| February | 19.52 | 19.54 | -0.1% | |||||
| March | 17.98 | 21.49 | -16.3% | |||||
| April | 17.34 | 19.17 | -9.5% | |||||
| May | 18.39 | 20.35 | -9.6% | |||||
| June | 15.88 | 17.35 | -8.5% | |||||
| July | 17.78 | 18.62 | -4.5% | |||||
| August | 18.84 | 18.62 | 1.1% | |||||
| September | 18.4 | 17.13 | 7.4% | |||||
| October | 21.81 | 20.06 | 8.8% | |||||
| November | 18.79 | 16.42 | 14.4% | |||||
| December | 19.81 | 16.42 | 8% | |||||
| Total | 223.21 | 230.84 | -3.3% | |||||
In March 2016, Macau reported a double-digit drop in gross gaming revenue. However, it was the last month when revenue shrank by more than 9%.
In August 2016, Macau’s gaming industry reported a 1.1% growth. The increase was attributed to the launch of Wynn Palace, Wynn Resorts’ new property in the city (first Wynn Resorts casino to be located on the Cotai Strip). Another casino resort – The Parisian Macao – opened doors in Macau in the very next month, further boosting revenue.
The launch of the two properties deserves to be paid a bit more attention. Both Wynn Palace and The Parisian Macao were created in a manner that made them more friendly to mass market casino players and non-gambling customers. This corresponded to a strategy, introduced by Macau’s government, under which the city had to try to lessen its reliance on VIP customers and on gambling customers, as a whole. As it seems, the change of course has worked relatively well so far.
The administrative region’s full-year casino revenue dropped 3.3% to MOP223.21 billion, beating Macau Chief Executive Fernando Chui Sai On’s forecast for revenue of around MOP200 billion. Mr. Chui has also remained modest in his predictions for 2017, yet he has noted that he expects a positive growth.
Conclusion
Macau finally seems to be bound for recovery. A new family-friendly integrated resort is set to open in the second quarter of 2017 and is expected to further bolster interest in the city and the new image it has been trying to build.
However, Mainland China has recently indicated that it is gearing up for stricter anti-gambling regulations by arresting more than 15 Crown Resorts staff members for promoting gambling offering illegally. And a potential crackdown on gambling could slim Macau’s chances for revitalization significantly.
Gambling Industry Overview in Russia
The following approaches will be presented
- Gambling legislation in Russia
- Gambling authorities in Russia
- Online casinos in Russia
- and more
Gambling has turned into one of the greatest policy problems for Russian Government since the beginning of the 21st century because of the rapidly increasing number of slot machines and gambling houses. Casinos started spreading all over the country, which caused a great concern for the local authorities, which were worried for the younger population.
Currently, gambling in Russia is legal in several regional subject areas. A few years ago – in 2009 – it was proclaimed as illegal in the rest of the country’s territory as part of Russia’s strict anti-gambling policy.
The authorities in the country have actually never supported web-based gambling activities, which became a reason why players’ access to poker-related websites has been blocked literally without an apparent reason.
History of Gambling Regulation in Russia
All forms of gambling were officially prohibited in 1928 and over the time when Russia was put under Soviet Rule. This lasted until almost the end of the 1980s, when some rules underwent through a change. In 1988, the country made slot machines legal in some areas only. The gambling prohibition was fully lifted in 1989.
In the period between 1989 and 2002 it was a time of a sharp increase in the number of casino operating on the territory of Russia, with over 50 gambling houses being run in Moscow alone. This type of entertainment became more and more popular among local citizens, but the country’s regulation was relatively poor, which made the country’s Government take urgent measures to control the activity.
This lasts until 2006, when a law that banned all forms of online gambling in the country was passed by the Russian Government. Until then, local customers were provided with access to most gambling websites.
In 2009, gambling was legalized in a total of four zones of the country: Kaliningrad Oblas, Altai Krai, Primorsky Krai and Krasnador Krai. The status quo lasted until three years later. In 2012, the online gambling ban in the country was brought one step further thanks to a ruling of the Supreme Court of Russia, which stated that online gambling providers’ websites must be blocked in the country.
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The Roskomnadzor – a list that states all the websites proclaimed as illegal by the Russian Government – was made public later in 2012. The list includes detailed information about a number of domains held by international gambling operators. This led to some of the largest names in the industry to shut the access to their websites for Russian customers, but other operators still provide their services in the country.
Overview
There was a total ban over gambling back in the USSR, after which gambling restrictions were a bit loosened, especially in the areas that were frequently visited by tourists. An increasing number of casinos and betting houses were made available until the gambling ban was lifted by the Government in August 1989 and the first gaming location in Moscow was opened.
However, poor regulation, monitoring and control over gambling activities on the territory of the country became the reason why gambling has started causing considerable problems for the Government. This led to massive changes of the Russian gambling laws in 2009.
Gambling activities in physical casinos have been prohibited in the country for half a decade now.
As mentioned above, gambling in Russia is officially legalized in several regions located in remote parts of the country. These regions are: Kaliningrad Oblast, Azov-City (the part of Rostov Oblast was excluded from the list), Altai Krai and Primorsky Krai.
The Primorsky Krai is considered perfectly chosen in order to take advantage of the flourishing Asian market. The region is located close to the Chinese border, which is to provide the local industry with the opportunity to attract Asian high rollers to the region.
There are also plans for a super casino situated nearby Vladivostok that is also aiming at attracting more players to the area.
In December 2014, it became clear that the President Vladimir Putin gave the green light to increasing the number of the regional subject areas, which resulted into including Crimea and Sochi to the list.
Overview Of The Casino Industry Association
Online gambling, on the other hand, is fully banned in the country. The same applies to live gambling activities in the rest of Russia’s territory. The country’s policy does not show in any way that there may be a change in these rules any time soon in the near future.
Currently, gambling in Russia has been a shaky subject, as its unchecked, uncontrolled and poorly monitored rise resulted in great gambling problems amongst the local population and especially among younger people.
In the country, however, there is a federal lottery, which is legal. The lottery offers players the opportunity to wager via two state-run lotteries – Gosloto and Sportloto. Some changes were also made in sports betting market, with the implementation of special licences that were required of operators.
Gambling Regulation and Authorities in Russia
Currently, the Russian Government performs the main state regulation of all services and activities related to gambling. There is a federal executive agency that is entitled to perform certain functions in order to monitor standard and legal regulation when it comes to gambling organization.
In addition, other federal executive authorities have some competences associated with control and audit of such activities. Several governmental bodies of the constituent entities of the country have also the authority to perform the functions of gaming zone management and regulation.
According to Russian legislation, gambling activities may be arranged by legal entities, which are registered in correspondence to the rules and procedures implemented by the Russian Federation. No legal entities, which are related to the country itself, the country’s constituent entities or local government authorities are provided with the opportunity to arrange and hold gambling services and operations.
There are four gaming zones formed in correspondence with the laws of the Russian Federation. After the President Putin agreed on increasing the number of the special gaming zones, such are expected to be set up within the Altay, Kaliningrad and Primorie, as well as on the border between the Krasnodar region and Rostov region.
The Government is to have the authority to create and liquidate a gaming zone, as well as affirming ad setting the zones’ names, borders and other characteristics under the terms of an agreement with the government bodies in constituent entities.
The current relevant authorities that are entitled with the general competence over any forms of gambling activities on the territory of Russia are the Government and the Ministry of Finance of the Russian Federation.
The Federal Tax Service of the country is also given some responsibilities to register bookmaking operators, totalizators and betting points. It is also responsible for checking the technical condition of gambling equipment. Some specific responsibilities are also given to some authorities, when it comes to control, monitoring and regulation in the latter’s general competence.
The major legislative act that defines the basics of gambling in Russia and provides regulatory solutions for the gambling services and activities in the country is the Federal Law of December 29th, 2006 No. 244-FZ.
As mentioned above, the Gambling Law calls all kinds of gambling illegal, except for the types that are regulated under specific terms and conditions in especially made gambling zones.
There are also several subordinate legislation enactments that provide better specifications and explanations to the requirements and procedures implemented in the Gambling Law. However, the legislation that is related to lotteries regulation is a separate one. Lottries are regulated by the Federal Law “On Lotteries” of November 11th, 2003 no. 138-FZ.
Online Gambling in Russia
Considering the overall state of the gambling industry in Russia, online gambling was also related to increasing concerns. So, it is not surprising that online gambling in Russia is just as heavily treated as land-based casinos activities. The web-based gambling services are currently actively banned.
More than a decade ago – in 2006 – playing games of chance was officially prohibited by the country’s laws. Poker, however, still remains in a grey area because of the discussions whether or not it is a skill or a chance game.
Locally-based players have been able to get access to overseas providers’ websites, no matter of the fact that ISPs have been asked to block websites that are related to gambling.