Amidst a serious decline in gaming revenue, ‘all’ Macau is waiting for the soon to be disclosed mid-term review of the casino industry. Understandably, given the cooling measures blowing in from the mainland, collateral damage has been piling up, making the outlook gloomier by the day. This is a business (an industry, they call themselves) of a resilient kind; however so resilient it has long defied each attempt to diversify from it…! We are talking about odd games, aren’t we?
And the odds are that from the grey zones of the industry bad news is rising as the plunge deepens to levels beneath the red line, also named as the new normal. Slightly obsessed with the Macau underworld, the South China Morning Post informed us about a new trend in the insurance business: Casinos and hotels are buying insurance policies against the kidnapping of guests, that is to say gamblers incurring bad debts. Although kidnapping seems to be a technical exaggeration, since illegal detention or private confinement would better serve the description of this emerging threat. The reality is that in spite of the surge in the number of police, the Secretary for Security set to work around casinos. In the first semester of the year the number of illegal detentions or private confinements increased more than 100%. Macau hopes dearly it won’t return to a cycle of bad debts/bad blood.
But the damage brought by the gambling slowdown has now spilled into the public budget. The government announced, through its Economy and Finance Secretary, Lionel Leong, a MOP 1,400 million haircut, roughly a 5% decrease in the procurement budget of each department. Well, almost every department!
Immediately after Secretary Leong’s announcement, his executive colleague, Alexis Tam from the Social Affairs and Culture portfolio, explained that the spending cuts would not be extended to Wealth, Education and Welfare…precisely the areas on his watch. One would not be surprised to know that a social association evaluating the performance of the Chui Sai On team of secretaries gave top marks to Secretary Tam and the worst spot to Secretary Leong. Not a big gap though, so no hard feelings! Nonetheless, a second spending cut may be in the pipeline.
Finally, to close this brief encounter with the shortening of the casinos chiffre d’affaires, we would like to recall’s CLSA Hong Kong gaming analyst Aaron Fischer main concern about the industry: “The Galaxy expansion hasn’t grown the market to the extent that we expected.”
Fresh ideas are now badly needed to address the “problem” of 20 thousand more new hotel rooms being built or already in the planning stage. Although an absurdity, one could bet visitors will arrive in waves to see that 391-meter foot-
bridge now installed at the Istmo Roundabout. Walking in circles is suggestive of a spinning wheel.
Anyway, the gaming industry long overcame its rude awakening… but it is comforting to know that the adjustment is ongoing to the new realities left behind by those carpet baggers selling holy water.
Note one: Regarding the immediate future of the MSAR´s casino industry, Desmond Lam, the author of “Chopsticks and Gambling,” probably got it right: everything will remain the same. However, it takes work to achieve that same same but different!
Note two: In the meantime, the true democrats surrounding Jason Chao – on his way to accusing old democrats Ng Kwok Cheong and Au Kam San of becoming a split runway faction – are voicing their concerns about Personal Data Protection and on the upcoming extradition treaty between Macau and Hong Kong.
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