Macau used to be China's 'good kid', but as Beijing turns on its gambling industry, everything might change
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Alvin Chau's arrest has decimated Macau's gambling industry. The city's proposal to reform its casino system is a strong political message to the sector. The proposal aims at increasing local ownership in casino firms and giving a maximum of six licences. It also bans licence transfers between casinos. Macaus lost nearly $US5 billion in Hong Kong stocks the day after Alvin Chau was arrested. He was accused of running online gambling operations involving 80,000 mainland gamblers.
Mr Chau is accused of illegally profiting from VIP room services in Macau casinos. He controlled the majority of VIP rooms in all Macao casinos and has casinos in Japan and South-East Asia. In 2013, almost 70% of Macaese gambling revenues came from the VIP services. Chinese President Xi Jinping is worried about the capital outflow of officials. MacAo is on a shorter leash than Hong Kong.
Gambling in Macau is the city's main source of income. Every one in seven residents works in the sector. The history of gambling in China dates back to the colonial Portuguese rule. Beijing allowed Macao to continue operating casinos. It was an opportunity to demonstrate its democratic system. It is hoped that the gambling sector will get better under Beijing's watch.
Beijing wants to diversify Macau's economy by opening up the casino industry to the Chinese tourist market. Macao's tourism heavily relies on the mainland Chinese market, with 70% of its 27.9 million visitors coming from the area in 2019. The heavy reliance on tourism put Maca into crisis during the pandemic, and its GDP dropped 56.3% in 2020. In 2021, Beijing wants MacAu and Guangdong to invest in Hengqin.
Beijing has recently cracked down on Macau's political and economic life. It banned the city's vigil assembly for the Tiananmen Massacre and banned 21 pro-democracy candidates from running in the September's legislative council election. The arrest of Alvin Chau could be the beginning of a similar crackdown on the other side of the Pearl River mouth.
