Special Report | 2008 – The Worst Year
It was, at the very least, a very strange year that was experienced in 2008 in Macau in the gaming industry.
A year marked by instability, as is typical of crises, but also by several events which, at this distance, are still not easy to decipher.
Take, for example, what happened to the then Chief Executive’s visit to Beijing in March: following a meeting with President Hu Jintao, it was decided that “the SAR Government will co-ordinate measures and policies to standardise and regulate the development of the tourism industry – in particular, the gaming sector, so that every industry can play a part in Macau’s sustainable development.”
Reflect upon this: the issue of new licences was halted and the land allocations for the construction of more casinos was frozen.
“At this stage, we’ve held some assessments and discussions and followed the central (Beijing) government’s directives on the gaming industry and decided to take these policy measures,” Ho told Macau’s legislators some days later.
How these measures helped the gaming industry in the difficult months that would follow is not clear even today. As it is not known whether Beijing’s decision had to do with the financial instability that was already perceived around the world.
What is known is that ‘the MSAR Government abandoned its passive role and began to intervene in the development of the gaming industry,’ according to the authors of Political Economy of Macau since 1999 – The Dilemma of Success. Later, at the request of the casinos, the government also put a cap on junket commissions.
“However, in 2008, the global financial crisis plunged Macau’s casino industry into an unprecedented slump. There was almost a palpable fear about ‘how the city would retain its prosperity’,” state Yufan Hao, Li Sheng and Guanjin Pan.
In June, Galaxy dismissed 270 local casino workers, including some dealers. In November, Sands, after reducing the salaries of its casino staff by 13 per cent, suspended construction of some of its mega hotels and malls on the COTAI Strip. About 10,000 construction workers were put out of work, including 4,000 from Hong Kong, 4,000 from Mainland China and 2,000 from Macau (27 per cent of the total local construction workforce).
“The global economic crisis began to have a profound impact upon Macau’s economy,” is the opinion of U.W. Tang and N. Sheng, both University of Macau teachers.
From December 2008 to June 2009, gross gaming revenues decreased for seven consecutive months.
“The profit drop during 2007 – 2008 in Macau had to do with several simultaneous large casino openings, the severe global financial crisis, and the sudden tightening of the Free Travel Scheme policy. It is fortunate that this drop turns out to be transitory after the casinos’ business life cycle has entered the upward climbing stage, the impact of the crisis has died away, and the Mainland policy has been relaxed again. Macau’s casino profitability has begun to rise since 2009 even faced with potential competition from Singapore, whose casinos opened early in 2010,” wrote Xinhua Gu and Pui Sun Tam (from the University of Macau) in Casino Taxation in Macau: An Economic Perspective (2011).
“The global economic crisis began to have a profound impact upon Macau’s economy” – U.W. Tang and N. Sheng
A year of mixed signals and difficult to interpret, this 2008.
On the one hand, it was the year in which Macau’s gaming revenues surpassed those of Las Vegas and Atlantic City combined, having overtaken Las Vegas’ earnings in 2006, and the city had become the most profitable casino destination and lucrative gaming market in the world. On the other hand, with the decline of the number of inbound tourists and moratoria on tourism related projects, Macau’s GDP contracted for three successive quarters from the fourth quarter of 2008 (recovering in the third quarter of 2009).
And what about the measures called for by Beijing and announced by Edmund Ho?
“Despite efforts by policymakers to keep gaming growth under control, the industry experienced a tremendous boom between 2008 and 2013 as rapid economic growth in Mainland China generated rising demand for Macau’s casinos.
“This boom brought a dramatic physical transformation of Macau’s urban space, with rapid expansion of new casino resorts that had been approved before the freeze on gaming land was announced,” according to Mingjie Sheng and Chaolin Gu, both Mainland university researchers.
Principal indicators of games of chance
|Gaming tables (no.)||4,375||4,017||4,770||4,791|
|Slot machines (no.)||13,267||11,856||14,363||14,050|
|Gross gaming revenue (million MOP)||83,847||109,826||120,383||189,598|