Opinion | Macau should bet on more than gambling

The pandemic has exposed the enclave’s over-reliance on casinos and the city’s new leader needs to build a strategy that coordinates all sectors of the economy in creating a sustainable future

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The Venetian Macao resort and casino, operated by Sands China Ltd., a unit of Las Vegas Sands Corp., left, and the Galaxy Macau casino and hotel, developed by Galaxy Entertainment Group Ltd., stands in Macau. Photo: Bloomberg

Published: 10:23pm, 25 Apr 2020Updated: 9:57am, 8 Mar 2021

The gambling adage that the house always wins has stood Macau in good stead since its gaming industry was liberalised nearly 20 years ago. Through global economic downturns to crackdowns on the mainland that reduced the flow of visitors, revenues from casino profits have still enabled the enclave to keep its public accounts in the black and support the local economy with handouts. But its “luck” has not held up against the coronavirus pandemic.

In his maiden policy address, the city’s new leader Ho Iat-seng warned that the gambling hub would be in the red for the first time in two decades this year as the pandemic exposed over-reliance on casinos. Covid-19 pushed down gaming revenue by about 60 per cent in the first quarter as visitor numbers slumped by more than half. A deficit is expected after commitment of more than 50 billion patacas (US$6.3 billion) – about 12 per cent of GDP – in relief measures for people’s livelihoods and businesses, in addition to cash handouts of 10,000 patacas for each permanent resident and 6,000 for each non-permanent. That said, many places would be happy to be in Macau’s position, with Ho declaring the coronavirus situation “basically under control” and revealing plans to ease some border restrictions to boost the city’s tourism by next month.

Ho was already facing a challenging job before the pandemic, with the economy in recession and casino revenues down. Economic diversification to reduce dependence on gambling has fallen behind expectations. Macau needs to redouble its efforts. Under the Greater Bay Area plan, the city is slated to be the region’s tourism and leisure centre. Casino operators are introducing more family-oriented entertainment along with art festivals and business conventions. Macau may have supplanted Las Vegas as the world’s biggest gaming centre, but it would do well to model itself on its rival, which derives 60 per cent of its revenue from other sources.

Ho is well credentialed to map Macau’s road to a sustainable future, with business and legislative experience. He is under no illusions. “Structural and deep-seated problems are starting to affect sustainable development,” he said. Officials need to show the way with a strategy that coordinates the efforts of all sectors of the economy for the city’s good.

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