Macau to face “unprecedented challenges” as it transitions away from gaming industry overreliance

A recent study conducted by scholars from the Shanghai Cooperation Organisation Research Institute, Shandong University, and the University of Macau has highlighted that Macau is set to undergo a challenging and critical test in the future. The city, known for its reliance on mainland Chinese high-rollers to sustain its gaming industry, is now facing the need and pressure to transition away from this model.

The study, authored by Edmund Sheng Li, Zhang Anning, and Yin Yechang, emphasizes that Macau must address a number of social issues “neglected because of the illusion of ongoing prosperity” brought about by the gaming industry, which experienced explosive growth following the city’s return to Chinese rule.

These issues, as the ‘A city profile of Macau—The rise and fall of a casino city’ scholars pointed out, are associated with political transformation, livelihoods, governance, and urban planning.

As reported by local media, the economic recession that accompanied the Covid-19 pandemic, as well as Beijing’s push for an overhaul of the gaming sector, have made it “impossible” for Macau authorities to maintain the “status quo” or implement reforms at a slow pace, the research concluded. 

In the study, the three scholars also said that the local authorities would find themselves in a situation where their ability to control fiscal spending was compromised amidst an expected decline in casino revenue.

Meanwhile, risks will likely mount as the development of burgeoning industries – namely modern finance, healthcare, high technology, MICE, sports, and culture in cooperation with Hengqin – will require increased government investment.

“In the context of the development of the Hengqin Guangdong–Macau In-Depth Cooperation Zone, along with the demands and expectations of Beijing and of Macau citizens regarding international participation, political and administrative reforms, and improved living standards, the Macau government is likely to face unprecedented challenges in the foreseeable future,” the paper read, as reported by Macau Business.

In addition, the scholars recommended that Macau, as a special administrative region with certain freedoms not found on the Chinese mainland, enhance its governance and utilize the autonomy granted by Beijing through the ‘one country, two systems’ framework. This will enable Macau to fully revamp its industries in response to both internal and external pressures.

U Io Hung, President of the Macau Professional Association of Gaming Promoters.

Earlier this month, reports indicated that the gaming hub’s junket industry continues to face a hard time as the high-rollers segment loses weight. The city currently has only 14 licensed gaming junkets in activity as the new junket law resulted in low income for these operators. U Io Hung, President of the Macau Professional Association of Gaming Promoters, described the challenging situation for junket firms at a recent seminar on the future development of the city’s gaming industry.