Despite its steady post-COVID recovery, Macau’s gambling sector faces rising competition from other Asian destinations. The local government has spent years attempting to distance itself from gaming and attract tourists with family-friendly options. However, the aftermath of the pandemic and rising economic uncertainty made such efforts exceptionally difficult.
The Last Few Years Were Unkind to Macau
Since the liberalization of the gambling industry in 2001, Macau’s economy has heavily relied on its casinos which account for over 80% of total revenue. Such a disproportionate focus on a single sector was not without issues, and in 2016 the government released a five-year plan to diversify its economy and reduce the share of gambling revenue to 45% by 2020.
Unfortunately, COVID-19 put these plans on hold and significantly damaged Macau’s gaming industry. Despite the sector’s steady recovery, frequent lockdowns and a substantial drop in foreign visitors indirectly bolstered competing gambling hubs like South Korea, Singapore, Malaysia, and the Philippines. Macau still attracts 90% of its tourists from mainland China and Hong Kong, but foreign visitors are instrumental in fostering a lasting reputation.
Rebranding the “Las Vegas of the East” Will Not Be Easy
Diversification-wise, gambling’s share of the total revenue remains unchanged despite the local government’s substantial efforts. However, progress is there. The government is relentlessly investing in developing new industries like tourism, finance, and technology. Numerous new initiatives aim to draw visitors away from casinos and towards the city’s cultural and heritage attractions.
New licenses have operators invest substantial amounts in non-gambling activities, with a planned $14.7 billion going towards water and amusement parks, spas, and food courts. However, such attractions are unlikely to attract more than betting-weary punters without a complete rebrand and a titanic marketing campaign. Macau’s name is synonymous with gambling, and shifting away from such will be challenging.
Gambling Is Still Vital to Financing Diversification
Another avenue for Macau to step away from gambling is the Chinese government’s intentions to turn the region into a financial center, attracting institutions, international finance companies, and investors. Developing a technology industry by creating incentives for tech companies and entrepreneurs is another possibility, but doing so artificially is unlikely to yield any meaningful results.
Overall, Macau finds itself in a precarious position. Diversification will require exorbitant funding, will take years, if not decades, and may not even work. However, remaining fixated on gambling leaves the economy vulnerable to another disaster. The territory needs to walk a fine line between utilizing casino profits to bolster other sectors and remaining competitive enough to secure such funds in the first place.