Macau has enacted the “Law to Combat Crimes of Illegal Gambling,” which introduces significant changes to tackle unlicensed gambling and associated practices in its gaming sector. Effective October 29, the new law strengthens the city’s measures against illicit gambling activities and aligns Macau more closely with China’s broader regulatory objectives.
Tougher Penalties for Gambling Violations
The law, published in the Official Gazette on October 28, introduces stringent penalties for various illegal gambling activities, such as the notorious “multiplier” practice, unlicensed online gambling, and unauthorized currency exchanges. Under this new legislation, individuals involved in illegal gambling or online gambling could face prison terms of one to eight years—a marked increase from the previous maximum penalty of three years. Additionally, participants in unlawful gambling activities risk up to six months in jail, while those involved in unlicensed currency exchanges could face up to five years.
The “multiplier” practice, a form of under-the-table betting that artificially boosts the value of on-table bets, has come under intense scrutiny. Recent criminal cases involving former junket operators implicated in tax fraud have brought this practice to the forefront, prompting Macau’s government to address it explicitly under the new law.
Crackdown on Unauthorized Online Gambling and Money Exchanges
In response to the rise in illegal online gambling and unlicensed currency exchange, the law also prohibits the promotion and operation of unauthorized online gaming. Macau’s government has reiterated that it has no plans to issue licenses for online gambling operations, signaling a continued hard stance on unregulated digital gaming activities. To bolster enforcement, law enforcement agencies now have extended powers for undercover investigations and nighttime searches across Macau’s casino and resort areas, a move that Macau’s Judiciary Police believe will support the crackdown on illicit gambling-related activities.
Broader Regulatory Shift and Foreign Investor Concerns
The introduction of these measures follows the October 2024 election of Sam Hou Fai, Macau’s new Chief Executive and the first mainland-born individual to lead the region. His leadership reflects a shift towards tighter regulatory control, which mirrors Beijing’s economic strategies, particularly the “common prosperity” and “dual circulation” policies. These strategies aim to reduce Macau’s dependence on gaming revenue, potentially challenging foreign gaming operators who rely on the region’s casino industry.
A recent report by Steve Vickers and Associates (SVA) notes rising regulatory pressures on foreign gaming operators in Macau, as the government encourages investment in non-gaming sectors such as tourism, entertainment, and conferences. With over 11,000 arrests in 2023 related to unlicensed currency exchange and underground banking in Macau, regulatory scrutiny has intensified as Beijing attempts to control capital outflows from the mainland through Macau’s casinos.
Adapting to the New Regulatory Landscape
The regulatory shift signals both opportunities and challenges for foreign investors as Macau’s policies align with China’s broader economic goals. SVA recommends that investors with interests in Macau and China adapt their strategies to address the heightened regulatory risks in the evolving environment. Casino operators are expected to diversify and support non-gaming sectors, a move that reflects China’s broader push for economic diversification.
As Macau’s regulatory framework continues to evolve, investors and businesses operating in the region will need to navigate carefully amid rising political and financial pressures, reassessing their strategies to stay aligned with the city’s—and by extension, Beijing’s—goals.
According to Citigroup’s latest report, Macau’s high roller segment, particularly within the premium mass gaming category, has experienced a sharp rise in 2024. Known as “whales,” these affluent gamblers have significantly increased their spending, outpacing previous records set in 2023. Citigroup’s monthly survey reveals that both the number of whales and the total wagers placed this year have already surpassed last year’s figures.
Whale Activity Soars in 2024
In the first nine months of 2024, Citigroup identified 228 whales—players betting HKD100,000 (approximately US$12,842) or more—placing a combined total of HKD43.3 million. This marks an increase from the HKD39.7 million wagered by 224 whales in 2023. Analyst George Choi, in a report shared by GGRAsia, stated, “As of this year, 228 whales have wagered HKD43.3 million, surpassing last year’s total of HKD39.7 million from 224 whales.”
Moreover, these high-rollers’ average wager per session has also risen. In 2024, their bets averaged HKD655,000, a notable 43% jump from the HKD457,000 recorded in 2023. Choi added that the trend has been accelerating, with the last five months showing an even higher average bet of HKD728,000. Despite economic uncertainties in mainland China, wealthy gamblers in Macau continue to display confidence in their spending habits.
Growth in Premium Mass Players
The Citigroup report also highlights a boost in the number of premium mass players. In September 2024, the survey recorded 613 premium mass players, a 42% increase compared to the same period in 2023. However, the average wager per player saw a slight 5% decline. Despite this dip, the overall market remains strong, as evidenced by a 36% year-on-year rise in total wagers.
Sands China Ltd emerged as the leader in September 2024, commanding a 26% share of total wagers, up from 22% in August. Melco Resorts & Entertainment Ltd also saw gains, increasing its share to 17%, up from an average of 13.5% in the first eight months of the year. Melco’s recent rebranding of its premium mass products appears to drive this success, with early indications of strong performance at Studio City.
Resilience of Macau’s Gaming Sector
Citigroup’s September survey shows Macau’s gaming sector remains resilient despite broader economic challenges. Total premium mass wagers reached HKD11.9 million in September 2024, a 36% increase from the HKD8.8 million recorded the previous year. The survey also documented 21 active whales in September, compared to 17 a year earlier. One notable bet at Galaxy’s StarWorld Horizon room reached HKD640,000, while several other whales placed bets between HKD100,000 and HKD250,000.
These figures reflect Macau’s enduring appeal as a global gaming hub, attracting affluent players despite economic headwinds. The continued growth in whale activity and premium mass participation highlights the region’s strong market performance.
The second quarter of 2024 has ushered in a transformative period for Macau’s casino industry, marked by unexpected shifts in market dynamics and the emergence of new competitive forces. While Sands China Ltd has maintained a strong presence, the landscape is evolving rapidly, with innovative strategies from both established players and newcomers reshaping the market.
Digital Integration Drives Mass-Market Growth
A standout trend this quarter has been the surge in digitally-enhanced gaming experiences, particularly in the mass-market segment. Several operators have successfully integrated augmented reality (AR) and virtual reality (VR) technologies into their casino floors, creating immersive environments that blend traditional gaming with cutting-edge digital interactions. This approach has resonated strongly with younger demographics, driving a 15% year-over-year increase in mass-market gross gaming revenue (GGR) across the industry.
Sustainability Initiatives Impact VIP Segment
In a surprising turn, the VIP segment has seen a notable shift towards environmentally conscious high-rollers. Operators investing in green technologies and sustainable practices have gained traction among this elite clientele. One standout example is the newly opened “EcoLux Casino,” which has captured a significant 18% of the VIP market share despite being a newcomer. The casino’s commitment to carbon-neutral operations and locally sourced, organic dining options has struck a chord with affluent, environmentally aware patrons.
Diversification Beyond Gaming
The most successful operators this quarter have demonstrated a keen ability to diversify their revenue streams beyond traditional gaming. Entertainment complexes, luxury retail, and world-class dining experiences have become increasingly important factors in overall financial performance. The “Macau Cultural Festival,” hosted by a consortium of casinos, drew over 500,000 visitors and generated substantial non-gaming revenue, highlighting the growing importance of cultural tourism in the region.
Regulatory Changes and Their Impact
Recent regulatory changes aimed at promoting responsible gaming have had a mixed impact on the industry. While some operators have faced challenges in adapting to stricter oversight, others have thrived by developing innovative compliance solutions. The introduction of AI-powered responsible gaming systems has allowed certain casinos to maintain profitability while adhering to new regulations, setting a new standard for the industry.
Technology-Driven Financial Performance
The integration of blockchain technology for transparent financial reporting has become a key differentiator this quarter. Casinos adopting this technology have seen increased investor confidence, reflected in their stock performance. One operator reported a 22% increase in its share price following the implementation of a blockchain-based auditing system, signaling a potential shift in how financial performance is evaluated in the industry.
Looking Ahead: Emerging Trends
As Macau’s gaming industry continues to evolve, several trends are emerging that could shape its future:
- The rise of e-sports betting lounges within traditional casinos.
- Increased focus on wellness tourism, with casinos incorporating luxury spa and health retreats.
- The development of “smart casinos” that use IoT technology to personalize guest experiences.
- Growing emphasis on local art and culture, integrating Macanese heritage into casino designs.
While traditional metrics like GGR and EBITDA remain important, the success of Macau’s casinos is increasingly being measured by their ability to innovate, adapt to changing consumer preferences, and create holistic entertainment experiences. As the industry moves forward, the ability to balance cutting-edge technology with authentic, culturally rich experiences will likely determine the market leaders in this new era of Macau gaming.
Eight New Cities Added to IVS Program
In a move that is expected to boost Macau’s economy, the State Council of the People’s Republic of China announced on Saturday that eight additional cities will be included in the Individual Visit Scheme (IVS) program. Starting from May 27, residents from Taiyuan, Hohhot, Harbin, Lhasa, Lanzhou, Xining, Yinchuan, and Urumqi will be able to apply for IVS visas, allowing them to travel to Macau and Hong Kong without the need for business visas or participation in group tours.
Macau Government Welcomes the Development
Ho Iat Seng, the chief official in Macau, celebrated the development and stated that it would bring more visitors to the region. Macau is the only place under Chinese control where casinos are allowed to operate. The Macau SAR Government plans to promote more international events, enrich the content of MICE (Meetings, Incentives, Conventions, and Exhibitions), and offer a diverse range of cultural and sports activities to create a unique travel experience for visitors.
Casino Stocks Surge on IVS News
The announcement of the IVS expansion had an immediate positive impact on the US-traded casino stocks operating in Macau. Las Vegas Sands, MGM Resorts, Wynn Resorts, and Melco Resorts all saw their shares rise between 1% and 4% as of 11 am EST on Monday. This surge in stock prices reflects investor confidence in the potential growth of Macau’s gaming industry following the IVS expansion.
China’s Continued Support for Macau
Gaming analysts view the addition of eight cities to the IVS program as a clear indication of China’s ongoing commitment to supporting Macau’s economy. It also suggests that Beijing leaders do not strongly oppose casino gaming, which is crucial for Macau, as casinos accounted for 77% of the city’s tax revenue in the previous year.
Macau’s Changing Economic Landscape
The expansion of the IVS program comes at a time when Macau is undergoing significant changes in its economic landscape. The city has recently forced out most VIP junket groups that catered to mainland high rollers, and the six casino companies operating in Macau have pledged to invest nearly $18 billion in nongaming projects at their casino resorts. These investments were made in exchange for 10-year extensions of their gaming licenses.
IVS Program Explained
The Individual Visit Scheme, initiated in 2003, allows people in the 59 qualifying cities to apply electronically for visas to travel to Macau or Hong Kong. The travel permits are valid for up to a year and allow a person to visit the named SAR for up to seven days. There are currently no limitations on the number of IVS endorsements a traveler can receive in a given year.
Increased Visitor Expectations
In January, the Macau SAR Government expected 33 million people to visit the casino enclave this year, which is approximately 84% of the city’s 2019 traveler count. With the addition of eight more cities to the IVS program, this forecast could be revised upwards, further boosting Macau’s economy and its recovery from the impacts of the COVID-19 pandemic.