Collapse in Gambling Totally Crushes Macau’s Overall Economy

Other places so dependent on tourism face a similar fiasco. But Macau had already been badly hit by China’s crackdown on corruption and capital flight.

By Wolf Richter for WOLF STREET.

Just how hard economies that mostly depend on tourism – and everything related to it – have gotten hit from the Chinese travel restrictions, and from travel restrictions more broadly, is exemplified by Macau whose economy depends largely on gaming: Not only gaming revenues, but also hotel bookings, restaurants, entertainment, fancy retail shops for tourists, money laundering services and other financial services, etc., plus all the secondary and tertiary activity associated with them, such as the salaries spent by employees for food and rent and what not, and how this money then circulates.

So when gaming revenues collapsed because the casinos were shut down, and because tourism from Mainland China had halted, and the secondary activities also swooned, overall economic activity collapsed by half – and we’ll get to that in a moment.

Gaming revenues in April were down 79% from April last year to 2.04 billion Macau pataca ($250 million), after having collapsed by 85% in March, to just 1.25 billion pataca, according to Macau’s statistics agency DSEC. At the peak in March 2014, gaming revenues reached 14.5 billion pataca. While revenues have ticked up just a bit in April from March (see that little hook), and are expected to tick up in future months, they’ll remain far below where they used to be:

Macau’s gaming industry had been struggling, to put it mildly, since the peak in March 2014, after which China’s crackdown on corruption and its subsequent crackdown on capital flight did a job on Macau.

It is the only place in China where the Chinese can legally gamble. And it was a convenient place to circumvent China’s currency controls and siphon money out of China and send it out of harm’s way, by, for example, investing it in a house in the US or Canada. A whole industry had sprung up in Macau to make this convenient.

But the crackdown on corruption scared high-rollers away. And the subsequent crack-down on capital flight gave people a big reason not to go to Macau and find other avenues. GDP started dropping in 2014 and continued to decline until Q2 2016.

But even after the economy started growing again, in line with gambling revenues, it never returned to the peak levels of Q4 2013 (139 billion pataca). In Q3 2018, the high in this cycle, real GDP was 118 billion pataca, down 15% from the 2013 peak.

Then in Q1 2020, while still struggling to slow down the structural decline stemming from the crackdown on capital flight, Macau’s gambling revenues and therefore the entire economy got hit by the travel restrictions and the shutdown of casinos. GDP collapsed to 54.4 billion pataca:

In percentage terms, in Q1 2020, GDP collapsed by 50% from the prior quarter (“not annualized”).

To put that into perspective in terms of how US headlines tend to look at US GDP. In the US, the Bureau of Economic Analysis releases GDP data in various forms, including non-annualized as in Macau, and “annualized,” as shown in the US headlines. Annualized GDP growth means that essentially the quarter-to-quarter percentage change is multiplied by four to give you the annual rate.

In the US, Q1 GDP dropped 1.3%, not-annualized, from Q4. This is the method used in Macau and most countries. But what you saw in the headlines was a 5.0% drop “annualized” (-1.3% x 4 with seasonal adjustments). In other words, while US GDP dropped 1.3% in Q1, Macau’s GDP plunged 50%.

The chart below shows Macau’s GDP percentage change (not annualized), compared to the same quarter a year earlier:

Note the reaction of Macau’s GDP during the Financial Crisis (falling as much as 10% year-over-year), during the Crackdown Crisis in 2015 (falling as much as 25% year-over-year), and then during the pandemic, when it collapsed as its one major industry – gambling – and all related activities were essentially shut down.

There are other cities and small countries that are extremely dependent on tourism in all its forms. And they’re facing a similar economic fiasco as Macau.

Never let a good crisis go to waste. US production, 4th in the world, plunged 32% in April. India’s production, normally in 2nd place, collapsed 64%. Read... Crude Steel Production: China Blows the Doors off Rest of the World During Pandemic After Already Huge Surge in 2019

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  59 comments for “Collapse in Gambling Totally Crushes Macau’s Overall Economy

  1. 2banana says:

    Out of curiosity, is there anything to do in Macau besides gambling?

    Las Vegas is very diverse in fun. In fact, I usually have little time to gamble there while doing other fun stuff.

    Still spending lots of money. Just not on a table.

    • char says:

      Eating food, walk from one side of Macau to the other. The long side otherwise it takes to little time. Visit the old church. That’s about it. Remember, Macau is very small.

      • roddy6667 says:

        There are hundreds of narrow, winding streets with old European architecture. I stay in one of these neighborhoods when I visit. We have breakfast at a Vietnamese street food shop and coffee at a Filipino shop a few blocks away. There are street fairs and markets. During certain holidays, there are a lot of public events. This probably does not appeal to somebody who came to Macau to gamble in a flashy casino. Macau, when there is no lockdown, is a very easy place to visit. From the time you get off the plane to being on the sidewalk waiting for a taxi is only 7 minutes. A lot more people seem to speak English here than in Hong Kong.

    • Clay says:

      There are indeed *some* things to do in Macau as a tourist as noted by others below, but likely not as many as Vegas if one is so inclined to the Vegas entertainment options.

      Had a former colleague who decided to play poker online and offline for his next phase of “work”. He started in Macau but eventually moved to Vegas so he could have more to do outside of “office hours”.

    • intosh says:

      Not much honestly. And even for the casinos as a tourists attraction, Las Vegas is still way way nicer, cleaner, more convenient and more enjoyable.

      Food, if you are really a big fan of jerky and pork chop sandwish/bun, then it may be (a big maybe) worth your time. Otherwise, don’t bother — you won’t miss anything.

    • Willy Winky says:

      Not a whole lot.

      They have tried to diversify but when your punters are mostly there to launder money, a Celine Dion performance is not very compelling.

      It’s not exactly a place for family fun.

      They had a dedicated Cirque de Soleil theatre at one point — it was mostly empty when we went – and closed soon after.

      The Dancing Water Show is about the only clean option in the city.

      Many of the hotels – including the Holiday Inn – have dedicated bars with ‘hostesses’… I recall once staying in the Holiday Inn Macau – and remarking to the group I was with ‘I wonder how Holiday Inn HO would react if they knew there was a bordello in one of their properties’

      They are not the only major hotel chain with this service in house…

      Someone with a hidden camera could do some big damage to these hotel brands.

      Lots of top end restaurants but my favourite remains Fernandos… serving simple Macanese food with decent wine …. it’s on Coloanne Island near the beach 20 minutes drive from the casinos.

      Definitely worth spending a weekend there if you are in Hong Kong — even if you don’t gamble or have an interest in the ‘Holiday Karaoke Bar’.

      There are lots of historical sites and areas in spite of the casino sprawl

      • Willy Winky says:

        I guess the Macau Tourism Association won’t be hiring me as an ‘ambassador’ … :)

      • Wolf Richter says:

        Willy Winky,

        “Someone with a hidden camera could do some big damage to these hotel brands.”

        I think it would do the opposite: a lot of free publicity — what better promo is there than girls? — that would bring in men from all over the world and fill up those hotel rooms. To heck with gambling.

        • Willy Winky says:

          Ha ha …. possibly.

          Depends on how one wants to position their brand I guess!

      • roddy6667 says:

        Prostitution is legal in Macau and Hong Kong. I’m sure that all the hotels are aware of that. If you are a Bible thumper, they are not the places for you.

        • Portia says:

          LOL! That is precisely where “bible thumpers” [men anyway] will be drawn. Take it from a recovered Baptist.

      • Xabier says:

        Out of curiosity, do the idle, rich, fat Arabs make there way there in the same way that they are lured by the hookers of London?

        • roddy6667 says:

          I don’t see many Arabs there. But then, I don’t go into the casinos or the big hotels. We stayed at one guest house that is the kind of place you want if the Mafia and Interpol are looking for you. My niece books all our flights and hotels. She does a good job making sure we experience the local culture.

        • Harrold says:

          Arabs prefer a different body type for the most part.

        • Willy Winky says:

          Been to Macau 100+ times … never noticed any Arabs there … mostly mainland Chinese.

          I suppose if you can get what you want in London .. why fly all the way to Macau.

    • Stephen C. says:

      There are legal brothels in Macau, in walking distance from the Casinos, if that’s your thing. Not recommending them, though, because if you are not Chinese you will be tolerated but not welcomed.

  2. cg says:

    Gee. What a shame.

  3. MonkeyBusiness says:

    A couple of friends from Asia are now day trading the US stock market. They are the types that would usually go to Macau.

    Everyone knows that in the US casino, the losers are people who sell.

  4. Wolf Richter says:

    Dear Readers,

    Finally, after a year and a half of dilly-dallying around, and after many complaints, my podcast “THE WOLF STREET REPORT” is now available on iTunes, Spotify, and Stitcher. Others are coming.

    Only the last WOLF STREET REPORT “America Convulses in Pain, Fed Bails Out the Wealthy” is available on those directories.

    All prior ones are on YouTube.

  5. Mr Wake Up says:

    Interesting 79% down in April

    Wynn stock trading over $100 from its $35.84 low

    Just like most other fundamentals dont matter I guess neither does the fact that Wynn is slightly under 79% co dependent on Macau

    • roddy6667 says:

      Macau had become the favorite 3 day getaway for my wife and I. And we don’t gamble. It has great 19th century Portuguese architecture, fantastic food, many historic sites, and is very walkable. There are many Vietnamese and Filipino neighborhoods. The Hong Kong style dining is everywhere. We have a favorite Dim Sum restaurant. We went 4 times in 16 months, but since the outbreak, it is unreachable by outsiders. Formerly it did 7 times the gambling business of Las Vegas. I have noticed that Wynn doubled down in Macau–he has two casinos, one on each island. He has to be losing a lot of money every day between Vegas and Macau.

  6. nick kelly says:

    I had to look up Macau on Wiki for a refresher. For those who don’t know, it’s like a second Hong Kong about 60 miles away, separated from the Chinese mainland by very little water. A previous Portuguese concession leased from China, it was handed back to China in 1999 under a similar deal as with Hong Kong: a lot of self- governing autonomy as long as it behaves.

    Here is my question: with half its GDP coming from casinos (about 7 times Vegas) and 25 % of the workforce in them and related services ..what now?
    As the most densely populated place in the world, it obviously can’t feed itself.
    Does China come to its rescue, or are we looking at starvation in a highly developed city state?

    • roddy6667 says:

      Nobody is starving there. They get their food from the mainland just like always. The Macau government has issued something like Food Stamps to make up for the lost revenue from the casinos. All the surrounding countries have extremely low numbers for COVID. I can see them opening up soon, initially only to neighboring countries. Americans and Europeans will probably be the last to be let in.

      • nick kelly says:

        ‘No one is starving there’
        Present tense.

        ‘Or are we looking at starvation…’
        Refers to future.

        I know they aren’t starving yet and meant deprivation / subsistence rather than literal starvation, although many older Chinese will remember literal starvation in the Mao era. And of course they would get their food from the mainland but I assume they pay for it. How long can they do that and how long will food stamps replace an economy? Re: other countries. As the only legal place to gamble in China, I understand Chinese were about 80 % of its business.

        To put it in monetary terms: tourist dependent Spain has the EU and ECB, Vegas has the Fed. Is Macau on its own and if so how long can it borrow to sustain itself and its currency ?

        • roddy6667 says:

          Things are OK in Macau. It will not turn into some post-apocalypse nightmare. China will not allow Macau or Macau to fail. The entire area–HK, Macau, Shenzhen, and everything in between are being transformed into a megacity. So is the area between Beijing and Tianjin. Only 650,000 people live in Macau. They can be subsidized easily until things return to normal. There are only 55 people sick with COVID in all of mainland China today. Things will open up soon.

        • Portia says:

          Does Wynn still have Trump? And how much will that matter?

  7. Cobalt Programmer says:

    Las Vegas was a mafia outfit to launder they money in a legal way. It was not a profit oriented venture. Even after tourism and diversification they were not profitable. In the movie casino, at the end, Robert DeNiro says its all junk bonds now. All boom, glliter and bust. My guess is that, Chinese millionaires and billionaires uses the place to launder the money by investing some bad money and showing some fake profits. So, regardless of the COVID, the Macau will be back. If i am in the situation, i will

    1. issue junk bonds
    2. convert all the properties in to stocks and trade it in NYSE
    3. apply for a bailout

    What happens in Macau will not stay in Macau.

    • VintageVNvet says:

      You are correct about the money wash in LV CP, and been that way ”4eva”, but not just for the mafia.
      Knew a tomato grower somewhere in the early 1960 era who, in addition to the tomato fruits sold ”on the books,”after going through his packing house, sold a million worth, in the field, for cash every year… and that was back when a MM was real money.
      End of season, he phoned LV, they sent a private jet, he ”gambled” a week or so, or, perhaps ”gamboled” most of that time, and came home with winnings of several hundred ”g’s” every year. Everybody was happy.
      If you believe the guy was a fantastic gambler, I have a bridge for ya,,, it’s a good bridge, and ya can make a MM or so every month!!!
      OTOH,,, although not a gambler, I LOVE LV,,, never been anywhere where ALL the folks are SO friendly,,, and can’t wait to visit there soon!!
      disclaimer: not holding any stocks in any casino in LV or anywhere else

  8. andy says:

    Can’t the Fed just bail them out.
    We’re in this together.

  9. char says:

    I’m surprised the title was not: Macau’s GDP shrinks 200% annualized.

    The population of Macau isn’t large so $US 6 billion is still very respectable and gambling and tourism will come back.

    • Thomas Roberts says:

      The large majority of its money coming in was from mainlanders funneling their money out of China. It’s not clear if that will come back. Macau, despite being the other 1 country 2 systems city was much more integrated into the mainland. One of the reasons the money funneling was allowed, was to make Hong Kong and Taiwan less concerned with being integrated into China. A semi free city that became prosperous, because, of the mainland was one of its selling points. That no longer applies, as Hong Kong is being forcefully integrated and Taiwan is is starting to sever ties with China.

      With the current economic climate the CCP will be more hesitant to allow money to leave the country, especially, as they have a shortage of USD.

      Also, the CCP has an insane plan to create new free trade zones, which, they amazingly, think would actually work. If this impossibility happened, Hong Kong and Macau, wouldn’t be needed.

      • VintageVNvet says:

        Disagree TR: Macau and HK could not have come anywhere near as far as they have since 1997, or whenever, without the full and enthusiastic cooperation of the elite/cadre of the CCP.
        Similar to, and most likely copied from, the long time reality/situation in USA, where not one reasonable advance of any kind, marketing any product of any sort, can proceed without the ‘ahem’ special fees paid, especially ”participation %” , by any means, to the municipal, state, and federal politicians.
        I may have the ”copied from” part exactly backwards to be sure, but this kind of thing has been going on 4eva, and will continue similarly, until and unless stopped by revolution or possibly otherwise in the ”experiment in democracy” of USA.

        • Thomas Roberts says:


          I did say Macau has benefited from the mainland. One of the reasons that the CCP pushed for this, was to make Hong Kong and Taiwan not concerned about being integrated into the mainland. Macau was to be a model city of how the CCP wouldn’t effect your life negatively and how you would get richer. However, this situation may no longer be relevant, because, Hong Kong is being forcefully integrated right now and Taiwan is is starting to sever ties with China. So the CCP no longer has to care about Macau for this particular reason.

          Realistically, because the mainland is destroying Hong Kong, Macau would be the only part of China that would have any real chance to become a real free trade zone. However, Macau is extremely tiny and the CCP hasn’t really pushed for it to be a potential Hong Kong replacement (as far as I’m aware). And it would be a long shot that Macau could replace Hong Kong.

          Hong Kong economically has benefited until now from the mainland, but, it was fine without it. Now though, as countries start to treat it like the rest of China, it will be far worse off than before 1997. Also little of that gain since 1997 has reached the average jo.

          I’m not sure of the rest of what you’re talking about.

  10. ook says:

    I used to visit Macau regularly in the 1980s, and have been back most recently in 2018. It used to be that the casinos were in a relatively small area, and the rest of the place oozed decaying colonial grandeur (the kind I like). And the local language was Cantonese, and occasionally Macanese patois.
    Going back in 2018 I saw the entire economy taken over by casinos/mainland tourists, the lingua franca is Mandarin, and the RMB is easier to use than the pataca.

    This is new money, most of it probably not going to the regular population. Looking at a 50-year GDP chart (, per capita GDP returning to 1990s levels, with some casinos disappearing, probably won’t make much difference to most regular Macanese.

    • Thomas Roberts says:


      Just like in the UK, the everyday population can be harmed by their city-state/country being a financial economy, even if there is an actual casino on top.

      Macau is heavily effected by its relationship with the mainland though, if it cannot be successful, the CCP might forcefully integrate it fully or repurpose it.

    • char says:

      The pataca is a currency used to rip of people from HK. IIRC X pataca where exactly 095 HK dollar so nobody would use an exchange for small transactions. It would not surprise me if regular Joe from Macau pays locally in $HK

      • roddy6667 says:

        In all the retail stores they take the Pataca or HK dollar, same price. It’s almost equal, but not worth doing a currency exchange. A business might make 1% at the end of the day. I haven’t seen any stores taking RMB.

  11. *10# says:

    Isn’t it hypocrisy on the part of the Chinese governments to embrace gambling as a means of anything at all ??
    Isn’t is kind of stooping too low ??
    The high moral ground is deemed higher in China .. n’est pas ??

  12. Mira says:

    My late son Joseph went to China ..”Mum there are soldiers with guns everywhere.” You can’t look sideways in China lest you end up in prison.
    And they are allowed to gamble.
    I was wondering about our very own Crown Casino here in Victoria .. how will they recover from this fiasco.

    • roddy6667 says:

      I don’t know if your son went to China recently, but it hasn’t been like that in a long time. You never see soldiers. There are only half the police per capita as in America, and they don’t walk beats or patrol in cars. They come out when they are called. They don’t carry guns. It is very hard to get arrested in China. Most things that American cops do are not even police issues here. Your image of China is totally wrong, but you are like many, many Americans. It only took me 3 days to realize that 95% of everything I “knew” about China was propaganda, back in 2009.

      • jon says:

        My friend recently traveled to China from USA for family affair and she was quarantined fpor 2 weeks in her own apartment in Shanghai. The HOA people/management folks are members of CCP and it was on them to make sure she stays locked-in and does not venture out.
        It was not a self quarantine for her but a forced one.

        There was no involvement of cops but she was kept under the observation of many people in her neighborhood who has some affiliation to CCP along with some app on her phone.

        The point is: Although there are no cops abundant in China, they are everywhere in a way.

    • Fat Chewer. says:

      Yeah, you could end up in prison for driving 65kmh in a 60 zone. Three hidden speed cameras seen during my 30 minute drive to work. Regularly. Drivers drive at 50 in a 60 zone to avoid huge fines and demerits. Victoria has become a police state.

  13. Mira says:

    Hey man .. only the best of the best gamble here .. the medical & legal professions .. & then every other person with a plastic card.
    Crown is haemorrhaging badly for sure.

  14. Portia says:

    Just testing to see if all my comments are in Valhalla.

    • polecat says:

      Did they get chrome-sprayed before sumittal first ?

      • Portia says:

        Had no idea about that. Is that a Sky-net thing?

        • polecat says:

          Sorry Portia,

          It’s a reference from the film ‘Mad Max- Fury Road’ ..

          Whenever any ‘War Boy’ is likely to meet his imminent death, he will proceed to spray chrome paint over his face-
          the last step before reaching Valhalla.

          Personally, I prefer the original ‘pre-cgi version.

  15. Portia says:

    We must say good-bye
    There’s no need for you to cry
    It’s better that I tell you this tonight
    Our affair has been quite heated
    You thought I was what you needed
    But the time has come, my darlin’
    To set things right, ’cause
    I’ll be harder than yer husband
    To get along with
    Harder than yer husband every night
    Harder than yer husband
    Harder than yer husband
    An’ I don’t want our love affair
    To end with a fight

    You been like a little angel
    How you loved me
    I appreciate the warmth of your embrace
    Well, the world don’t need to know
    How I adored you
    But there’s somethin’ I must tell you, darlin’
    Face to face…
    I’ll be harder than yer husband
    To get along with
    Harder than yer husband every night

    Harder than yer husband
    Harder than yer husband
    An’ I don’t want our love affair
    To end with a fight

    So it’s adios, adios, my little darlin’
    (adios my little darlin’…)
    Gotta go now…
    Keep that hankie that I gave you for
    when you cry
    There are things that trouble me
    And I’m sure that you must see
    That it breaks my heart the same as yours
    When we say good-bye

  16. Roger Fox says:

    With the current economic climate the CCP will be more hesitant to allow money to leave the country, especially, as they have a shortage of USD.

Comments are closed.