The soaring casino revenues in Macau (the world's biggest gambling hub) are putting a severe strain on the wider economy. This has forced hundreds of businesses to close and pushed unemployment to its highest point since 2009.
Wednesday's record gambling revenue for the former Portuguese colony was its lowest since September 2020. This comes a week after Macau warned that rising job loss and financial strain could lead to social conflicts and threaten the security of the city.
Only one place in the country allows you to legally gamble at casinos: the Chinese special administrative region. Macau is heavily dependent on casino taxes which make up more than 80% the government's revenue. This has made it difficult to diversify its economy.
"We are the most dependent city on tourism in the world." Glenn McCartney, associate professor at University of Macau, said that we had no other industries to draw on.
"Given that for 20 years we didn't diversify. It's not going to happen tomorrow. There's no quick fix."
Since the outbreak of coronavirus, Macau's dependency on gambling has been exposed. Visitation rates dropped more than 80% in the first quarter compared to the same period in 2019. This was due to COVID-19 travel restrictions.
Most Macau visitors are from mainland China. This country continues to promote a zero-COVID policy.
May gambling revenues fell 68% year-on–year to 3.3 Billion Patacas ($400 Million), but it is still far below the 26 Billion patacas that were hit in May 2019.
Six Macau casino operators are suffering daily revenue losses, and they have accumulated debt as liquidity continues its decline.
Gambling revenue has been hampered by China's efforts to curb capital outflows, and crackdown on the opaque junket market that is charged with bringing high-rollers from China.
The tiny territory is home to over 600,000. It has seen increasing economic losses and cost-cutting.
According to the most recent government figures, the unemployment rate has increased to 4.5% for local residents, an increase of 1.8% in 2019.
The Emperor Entertainment Hotel announced in April that it would close its casino starting June 26, citing a difficult business environment and a gloomy outlook in the high-end gaming sector.