China’s crackdown on corruption is destroying the huge gambling economy in the only place where it’s legal — Macau.
The owner of Macau’s six largest casino operators — Galaxy Entertainment, Melco Crown, MGM China, Sands China, SJM Holdings, and Wynn Macau — revealed that profits tanked by 40% in the first half of the year, due to a shortage of high rollers making big bets at its many tables.
Combined first-half earnings before tax plunged to $US3 billion (£1.9 billion), which is significantly down from just over $US5 billion (£3.2 billion) during the same period in 2014.
Galaxy Entertainment, which reported its interim results today, revealed that revenue even plummeted by 34%.
Since China’s leader, Xi Jinping, came to power two years ago, the country has cracked down on “gifting”, the practice of offering very expensive gifts to company executives or people in power. This includes entertainment.
While it is a long standing tradition in Asia, the practice has fallen under great scrutiny due to the range of corruption cases that have dogged government officials and company executives.
If the crackdown on gambling continues it could devastate Macau. The region overtook the Las Vegas Strip in gaming revenues in 2007 and an estimated 50% of its economy is based around gambling.