Macau is the leading destination in the world for gambling and will soon be the world’s leading area in wealth. This is something that could not have been believed just twenty years ago, and it happened without a massive resource discovery.
History of Macau
Macau is an autonomous territory of China. It is just a little less than 12 square miles in size and has a population of around 650,000. This makes Macau the most densely populated region in the world. Between 1887 and 1999, it was ruled by Portugal and then it was returned to China.
Since then, it has become the leading region for gambling globally; its economy depends predominantly on tourism and the gambling sector.
There has been gambling on the island since 1962, but it was monopolized by the Sociedade de Turismo e Diversões de Macau until 2002.
With the market becoming open to outside parties, major Las Vegas casinos took a keen interest in the region, setting the foundation for the gambling boom to come. The first major casinos to be opened were the Sand Macao in 2004 and the Wynn Macau in 2006.
In 2007, the Venetian and the MGM opened casinos on the island. At the time of building, the Venetian was the second biggest building in area anywhere on the globe. Since then, many other major casinos and hotel groups have opened plush premises on the island, creating vast competition.
Global leader in wealth
At the moment, Qatar is the world leader in wealth. By 2020, the economy per person is forecast to increase to almost $140,000 (£110,000) for each person.
This level of wealth has been achieved thanks to a significant supply of natural resources, along with the facts that profits were invested smartly rather than splurged and the economy was diversified. However, Macau is hot on the heels of Qatar and is poised to take over the top spot in the near future.
Figures from the International Monetary Fund (IMF) show how much Macau has grown since 2001. The gross domestic product (GDP) has multiplied more than three times, from around $34,500 (£27,000), with forecasts that this will reach more than $143,000 (£112,000) by 2020.
That would move Macau ahead of Qatar in the world wealth rankings. There is no end in sight for this growth, either, with the forecast of more than $172,000 (£135,000) in 2023.
This is thanks to the gambling sector, which accounted for $33bn (£26bn) in revenue in Macau during 2017. That was an increase year on year of more than 19%. The masses flooding onto the island are spending on hotels and other businesses in the area, further fueling economic growth.
Some are concerned that a continued stand-off between China and the United States could lead to a decline in the island’s fortunes. That could lead to uncertainty in the coming years because a lot of licenses will be up for renewal between 2020 and 2022.
Japan recently passed a bill allowing three resort casinos in the country. These will be multi-billion dollar resorts that could attract some visitors away from Macau by offering a similar quality experience.
The fortunes of the country are hard to imagine. The Portuguese must be just as shocked as anyone about how Macau’s fortunes have turned around since they handed control back to the Chinese in 1999.
The island’s economy has suffered significant setbacks before, mainly because of economic turmoil in China, but it is always managed to bounce back, so it is hard to imagine a significant event that could derail it for a sustained period.