Macau is the largest market for gaming in the world, with revenue nearly triple that of Las Vegas. While Macau has been at the pinnacle of the gaming world for the last few years, many gamers, investors, and casino owners alike are worried that the ongoing trade war between China and the United States is going to eventually affect the casinos. Some people believe that, in addition to the trade war, the issues that are affecting China could have a chilling effect on the country’s economy, and may lead to the much-rumored “China collapse theory.”
Declining Trust in the Chinese Government
Although Macau is semi-independent, it is very much affected by the events happening in Mainland China. Over the last five years, many Chinese people have reported feeling a lack of trust in the government. Part of the reason people have begun to lose trust in China is because of the continuing corruption scandals and the inefficiency of the government. For example, one of the most recent issues came when children were given vaccines that did not stop them from getting sick. In fact, some of the vaccines did not even contain material to immunize anyone.
In addition, the Chinese government has faced some backlash from the crackdown on Chinese corruption, especially in the relationship between the government and gaming. Government officials used to bring clients and other officials to the casinos in order to do business. However, the crackdown on Chinese corruption meant that the officials could no longer go into the casinos, which has been partly responsible for the casinos’ lower revenue.
Additional Issues with the Government
With the government crackdown, the Chinese public was assured that government officials would be free of corruption. However, many officials in China have been arrested for gaming corruption and money laundering. While China has advocated that the Chinese public should follow the rules of the casino, government officials have been arrested for cheating, which erodes the confidence of the public.
While the corruption and misuse of funds have angered many Chinese, others have voiced objections over the government continuing to crack down on religious and ethnic minorities in the country. This has led to sanctions against the Chinese from other countries.
The Trade War
Although the Chinese people are concerned about the government and the effect it is having on the casinos, by far the greatest concern is the trade war between the United States and China. Macau’s casinos derive the bulk of their income from high rollers, who can contribute as much as 60 percent to the overall revenue of the casinos. The problem comes when the high rollers do not have as much money to play with because of the tariffs imposed on their factories by the United States. Although the revenue of the Macau casinos has remained fairly steady over the summer, the concern is that the longer the outright tariff war continues, the more likely it is the casinos will begin to lose revenue.
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