- »Macao Examines Online Gambling After 2020 Revenue Drop
Macao Examines Online Gambling After 2020 Revenue Drop
Macao has long known that it would likely need to fully address the issue of online gambling. As so much of the world’s business went online in the past several decades, it was only a matter of time.
The complications regarding online gambling, however, seemed insurmountable.
Macao is a special administrative region of the People’s Republic of China, a nation that frowns on gambling in general. The assignment of Macao to the world of gambling was the only exception. Would China approve of online gambling, a venture that might be more accessible to Chinese players?
After a disastrous 2020 due to the coronavirus pandemic, Macau is willing to reconsider. The Macao Gaming Inspection and Coordination Bureau (DICJ) doesn’t have much choice.
Dependent on Gambling
The island of Macao had developed into a major gambling haven over the past several decades.
According to the 2018 census conducted by the Government of Macao, these were some key figures:
- Population: 667,400
- Population employed by hotel & commercial industry: 14.6%
- Population employed by recreational, cultural, and gaming services: 25%
- Households: 194.4
- Land area: 32.9 km²
- Visitor arrivals: 35,803,700
- Visitors from Mainland China: 25,260,600
- Visitors from Hong Kong: 6,327,900
- Visitors from Taiwan: 1,061,000
- Visitors from Korea: 812,800
- Visitors from Japan: 325,800
- Visitors from Philippines: 312,100
- Visitors from Malaysia: 227,900
- Visitors from USA: 201,800
- Visitors from Australia: 90,900
- Hotel occupancy rate: 91.1%
- Total visitor spending: 69,687 million MOP
- Visitor spending per capita: 1,946 MOP
- Total government revenue: 134,205 million MOP
- Tax revenue from gaming: 113,512 million MOP
- Gross gaming revenue: 303,879 million MOP
By 2019, Macao reported gross gaming revenue of US$36.73 billion from its 41 casinos. Across those properties, there were 6,739 gaming tables and 17,009 slot machines.
The Year of the Pandemic
Macau’s proximity to Wuhan, China, from whence the coronavirus pandemic was born, prompted Macao to act early when the virus spread. By the first days of February, ten Macao residents tested positive with Covid-19, one of whom was a hotel worker.
Macau Chief Executive Ho Iat Seng ordered all casinos on the island closed by February 5. Testing seemed to show that the lockdown cleared the virus, and casinos reopened on February 20.
The early detection and isolation of the virus worked for the island nation. As of November 20, as the world reported more than 55.6 million cases, out of which 1.34 million resulted in death, Macao reported only 46 cases in all of 2020. And all 46 people recovered.
While the numbers and effective response to the virus benefited Macao, however, none of that helped the casino industry. The casinos have remained open for the vast majority of this year. The problem is that most travel is forbidden around the world. A second wave of Covid-19 is currently surging around the world, so Macao is wise to not accept any visitors.
Without visitors, however, the economy has been in a deep depression since February 2020.
Numbers Paint a Dim Picture
Revenue numbers for 2020 show the direness of the situation for Macaos’ economy. The following are the gross gaming revenue numbers just for Games of Fortune from the Macao Gaming Inspection and Coordination Bureau (DICJ), for the sake of simplicity:
- January 2020: 22,126 million MOP (down 11.3% from 2019)
- February 2020: 3,104 million MOP (down 87.8% from 2019)
- March 2020: 5,257 million MOP (down 79.7% from 2019)
- April 2020: 754 million MOP (down 96.8% from 2019)
- May 2020: 1,764 million MOP (down 93.2% from 2019)
- June 2020: 716 million MOP (down 97% from 2019)
- July 2020: 1,344 million MOP (down 94.5% from 2019)
- August 2020: 1,330 million MOP (down 94.5% from 2019)
- September 2020: 2,211 million MOP (down 90% from 2019)
- October 2020: 7,270 million MOP (down 72.5% from 2019)
The most startling dose of the new reality for Macao came from January to February, showing a monthly drop of 86%. And as the year progressed, the reality set in as to the tone for the rest of the year.
In late September, Macao resumed its visitor scheme for Chinese visitors. The Macao Government Tourism Office predicted approximately 24,000 visitors daily from the Chinese mainland. That explains the monthly boost in October as some gamblers did begin to return to the casinos.
Even worse, the Macau Daily Times reported this month that nearly 60% of casino workers are now furloughed from their jobs without pay. Further, 80% of the survey participants in the island’s casino industry worry at some level about their jobs.
This is all happening as the nation plans to celebrate the 20th anniversary of the establishment of the Macao SAR.
Online Gambling on the Table
There has been a partial solution available for many years. Countries around the world – most notably France, Spain, Italy, and Portugal – have incorporated online poker and online casino games into their regulatory frameworks to great economic benefit.
There are many ways to launch online gambling platforms. The government may do it and run a state-owned website, or casinos may partner with online gambling operators and each launch their own if they choose to do so.
The first step, though, is to consider legalizing online gambling. Some in Macao are ready to do that and want to commission a study to investigate the potential benefits. DICJ Director Adriano Ho indicated in recent correspondence that its already happening.
Legislator Jose Pereira Coutinho had questioned the regulator about interactive gaming as a way to help the economic recovery from the pandemic and increase tax revenue. There may already be a study underway. And according to Macau Business, the DICJ is prepared to push for results so the government can consider a plan.
Ho wrote to Coutinho, “Before introducing [online gaming], the government has to conduct careful studies, which are still ongoing.” He also added that he and the DICJ are prepared to listen to suggestions, which will likely lead to a proposed framework that all could evaluate.
The primary concerns from Ho seem to be the potential for money laundering and an increase in gambling addiction.
If the DICJ and lawmakers will do their due diligence by studying other markets, they will discover that there are many ways for online operators to detect and prevent money laundering. And there are many ways that operators have addressed gambling harm and addiction, from using technology-based indicators to broadening the scope of existing responsible gambling measures.