Inside Asian Gaming

January 2016 inside asian gaming 35 society. Macau might end up being seen by mainland China as a net importer of economic benefits for itself but an exporter of social costs to the rest of China. The extent to which social costs — such as political corruption, the fallout from excessive gambling, and loan-sharking activities — visibly exhibit themselves on the Chinese mainland may have a direct impact on Beijing’s attitudes and policies relating to the individual visit scheme or the direct movement of funds between China and Macau. Harkening back to the more liberal extension of credit by junket agents, it may turn out that the reckless extension of credit and cutthroat competition for players and junket operators may have long-term negative consequences for Macau if Beijing concludes it must react to protect its citizens. The point at this time is that no one knows for sure what Beijing may be thinking for the long term, or what levers they may want to pull to rein in the runaway growth and economic dynamic of Macau. There are a number of issues that may arise if concessionaires and junket operators act in ways that invite negative reactions by China youngsters don’t agree with this single-pillar model of development.” Others appreciate the increase in business but still have complaints about the general benefits for the population. “The casinos have brought more customers,” said Chan Sang, a clerk at a pharmacy. “But my salary hasn’t gone up. I really just scrape by every month.” While the halt in licensing may hurt the absent operators, the current casinos should prosper — that is, if they’re large enough. ”There might be a possibility of the smaller casinos merging into the bigger casinos,” said Larry So, a Macau academic and political commentator. “We may see some of the smaller ones close up.” Part of the concern of the Chinese government is a perception of rampant corruption in the public offices of the Macau government. In January, Ao Man-long, a former government official, was convicted of a series of graft charges including kickbacks to speed the construction of casinos. Other public officials have been indicted, as well. The already-high stock prices of Macau’s public companies responded positively to the news. Most rose a significant amount following Ho’s address to the legislature. “The announcement is medium-term positive for Melco and Galaxy as a potential competitive threat is now removed,’’ wrote Karen Tang, a Hong Kong-based analyst at Deutsche Bank AG, in a note to investors. Macau, the only legal gambling location in China, is located about 60 kilometers west of Hong Kong. Meanwhile, Macau was still going strong in the first quarter of 2008. In fact, GGR for all forms of gaming combined shot up 62 percent to 30.1 billion patacas, around $3.8 billion. The main portion of that came from the casinos, which produced 29.8 billion patacas, around $3.77 billion. Wagering on horse racing, dog racing, football, basketball and lotteries made up the difference. For comparison, the figure was double that produced by the Las Vegas Strip casinos in the same period, according to the Wall Street Journal . VIP baccarat play accounted for 70 percent of the casinos’ collective take, up from 67 percent in the same period in 2007. At the end of the first quarter, Macau had 29 casinos with a total of 4,311 tables and 13,522 slot machines in operation. Of the six companies with licenses, Stanley Ho’s SJM was the market leader with 30 percent of all revenues. After SJM comes Las Vegas Sands, Melco/PBL, Wynn Resorts, Galaxy and MGM. One area in which Macau does seem to be showing the effects of conditions in the outside world is in tourist spending. Figures from the Statistics and Census Service are showing that the Tourist Price Index — TPI — rose 15.08 percent in the first quarter of 2008 compared to the same period last year. TPI was up 6.9 percent over the last quarter in 2007. The TPI measures the prices of things like restaurants, hotel rooms, and miscellaneous retail items such as jewelry. Compared to a year ago, restaurant services rose 19.52 percent and accommodations 13.34 percent. It is thought the record high price of gold is at the root of the 33.75 percent increase in miscellaneous goods. developments with a “light touch” to date. China wants to show the world (and Taiwan) that the one country — two system approach can indeed be successful. The Olympics in Beijing — opening superstitiously on the eighth day of the eighth month in 2008 — is probably also a factor in their benign treatment of Macau, along with the fact that Macau allows China to contain gaming to an easily controlled single location while quietly evaluating their long-term options. Many Asian governments have been looking at the success of Macau (and the orderliness of the Singapore integrated resort casino process) and considering how they might perhaps harness the casino economic engine for themselves. That might ultimately be the case for China itself, where it could harness the economic power of integrated resorts with casinos to regenerate other deprived areas of China, perhaps in the north of the country, or near Shanghai. On the other side of the argument for Chinese gaming expansion, there are undoubtedly concerns over social costs associated with expanding the presence of casinos in Chinese Blast from the Past June 2008