When inaugural chief executive Edmund Ho Hau-wah threw the liberalisation dice that took Macau's flagging gaming industry into the 21st century in 2002, few could have predicted its stellar rise to become the top city for global gaming, leaving Las Vegas in the dust. Heady double-digit growth year after year over the past decade had industry watchers and casino bosses alike salivating that a seemingly unending flow of customers and cash from the mainland would continue to deliver the riches to the former Portuguese enclave. But this year is one that most investors would rather forget. "A perfect storm" and "death by a thousand cuts" are how some industry insiders are describing it; 2014 saw the largest year-on-year revenue drop on record, and, significantly, in October - usually a peak season. Overall, Macau is poised to record its first full-year casino revenue decline. Macau also finds itself at a critical juncture. Both central and local governments have made it clear that the city must diversify into areas other than gaming. That refrain has grown louder with warnings in recent weeks from senior officials that Macau should be able to evolve into a hub for entertainment, meetings and conventions alongside nearby Hengqin Island as part of the Zhuhai special economic zone. In July, Pansy Ho Chiu-king, daughter of the original Macau casino tycoon Stanley Ho Hung-sun, identified global competition as the biggest threat to Macau's future and pledged to promote Macau as a world-class tourist destination. More than a decade ago, the city's fate and ambitions seemed markedly different. As Macau's handover to Chinese rule in 1999 loomed, the city plodded on under an ineffectual Portuguese administration that struggled to quash organised crime groups coming in to cash in on the twilight years of Stanley Ho's 40-year casino monopoly. Gangs battled for control of lucrative VIP rooms in Ho's casinos, sparking a four-year underworld war that cost the lives of government officials, police officers and dozens of gangsters. The shrewd Ho, at 93 one of Asia's richest men, managed to distance himself from the rampant organised crime within his casinos and remains very much in the game - owning one of the three casino concessions handed out after liberalisation. The enigmatic Ho's dynasty is not about to disappear any time soon either. Pansy and son Lawrence now run lucrative casino sub-concessions with American and Australian partners. By 2006, five more casino licences had been awarded - to Galaxy Entertainment Group, Sands China, MGM China, Melco Crown Entertainment and Wynn Macau. Macau now rakes in seven times the revenue of Las Vegas, with gaming accounting for 80 per cent of the city's income. Its unemployment rate is the lowest in the world, thanks to rules that allow only permanent Macau residents to operate gaming tables. At the end of last year, only 2 per cent of its permanent-resident labour pool of 570,000 was unemployed. Once seen as a poor country cousin by Hongkongers, the city now enjoys the higher average wage. But now the bracing pace of growth and the "build-it-and-they-will-come" model is under strain. First, Macau has been hit by the overall macroeconomic slowdown on the mainland, the supply stream for about 70 per cent of its gamblers. Second, rising wage costs are affecting bottom lines. The labour crunch looks set to continue to 2017. Bloomberg Intelligence estimates more than 50,000 workers are needed for the new resorts opening over the next three years. Local Macanese protested several times this year for higher wages, and a 14-month salary is now a standard package, with many companies throwing in stock options and other benefits to retain workers. A clampdown on liquidity has also hurt Macau badly. With each person only allowed to bring a maximum of 20,000 yuan across the border and withdraw 10,000 yuan a day from ATMs, high rollers got round the currency controls mainly by relying on shadowy junket operators. These middlemen bring in players, lend them credit to play and collect the debts later. Another common way to access cash was via UnionPay. Retail stores simply charge a customer's card and issue cash for a commission. Those two avenues dried up, however, after the high-profile disappearance of junket operator Huang Shan, leaving a US$1.3 billion debt trail, in May. Tightened credit in the aftermath of that scandal caused the collapse of smaller junket operators. Macau's anti-corruption campaign continues to run full throttle. Just last month, news broke that a top Macau junket figure was being investigated by Hong Kong authorities for money laundering. Assets of Cheung Chi-tai, formerly a major shareholder of Neptune Guangdong Group, were frozen. The consensus forecast is that the first half of next year will be gloomy and that the clouds will only lift later in the year. Galaxy Phase II is due to open mid-2015, followed months later by Melco Crown's Studio City and The Parisian by Sands China. Even as new casinos open, Macau has been warned to diversify its economic sources. Earlier this month, Li Fei, deputy secretary general of the National People's Congress Standing Committee, said the SAR government should not be overly reliant on the gaming industry. Then, Li Gang, director of the government liaison office in Macau, said acerbically that the government could "create another Macau". Plans to diversify are in the works. These include new projects in Cotai that will boast more non-gaming facilities such as Wynn Diamond's 15,000-seat Coliseum arena. Whether these will be enough of a game-changer to keep Macau ahead of the global pack is uncertain. Some early signs of headway came in October, when mainland visits and casino takings diverged. Despite a record 17 per cent year-on-year growth in the number of mainland Chinese tourists during Golden Week, casino revenues lagged, suggesting that there were tourists who went to Macau purely for leisure. CLSA gaming and consumer analyst Aaron Fischer is confident that the location and scale of Macau will help it maintain its position as the premier destination for Chinese gamblers. "There are 33 casinos in Macau. By 2017, the total investment in integrated resorts is roughly US$35 billion. Contrast that with the two casinos in Singapore that cost US$10 billion. Most other markets would be in the low single-digit billions. It seems really hard for other destinations to compete," he said. Like Hong Kong, Macau has seen a decreasing spend from its tourist base. This is due not just to the currency and other curbs, but sheer visitor fatigue. Singapore presents an attractive alternative for Chinese gamblers given its proximity and the common use of Putonghua. Even so, Singapore too is feeling the effects of the drop-off and Fischer believes the Philippines and South Korea may be the next best bets for Chinese gamblers. "The Philippines can potentially attract visitors from southern parts whereas Korea would appeal to Chinese from the north," he said. On the way ahead, Fischer said: "I wouldn't look at Las Vegas. I'd look at Singapore as a great example. The integrated resort model was pioneered there and the government planned it exceptionally well." One Singapore site is in the downtown Marina Bay area, ideal for conventions and meetings and close to malls and museums. The second site, on Sentosa Island, is a theme park with Universal Studios as a centrepiece. "The Macau government has done a fairly good job of expansion of the gaming industry but if we were honest, they should've planned it a bit better and dedicated certain parts of Cotai - one area to a theme park or other forms of non-gaming," he said. On a more encouraging note, analysts say Hengqin, with its family attractions such as Ocean Kingdom, plus education sector projects via the expansion of the University of Macau, could actually help Macau in the long-term. But there is much Macau itself can do to diversify its offerings, said analyst Brett McGonegal, CEO of the Reorient group, a boutique investment firm. "Macau is worlds ahead of Las Vegas in turnover profit and success but far behind in maturity and breadth of offering," he said.