The History and Development of Casino Gaming in Macau
INTRODUCTION
With more than three centuries of casino history, Macao was known as the "Monte Carlo of the Orient" and the "Las Vegas of the East." The core industry of Macao today is gaming. According to estimates, more than 70% of the Macao Special Administrative Region's total fiscal revenue in 2009 came from gambling taxes. Macao has recently become the greatest casino city in the world, with total gaming revenues periodically surpassing those of the Las Vegas Strip. The governments of the People's Republic of China and Macao Special Administrative Region, as well as the entrepreneurs' substantial investments and Chinese consumers' preference for gaming, are largely responsible for the gaming industry's success in Macao. This article will give a chronological summary of the growth of the Macao gaming sector.
THE EARLY DEVELOPMENT OF THE GAMING INDUSTRY IN MACAO
The first time Macao opened its harbor to tourists was in the sixteenth century, which is when the Macao casino business initially emerged. At the time, domestic helpers, harbor coolies, and expatriate Chinese construction workers all enjoyed playing video games. The gambling stalls were dispersed throughout the streets and lanes and were run by the bankers themselves because there was no gaming regulation in place. After Hong Kong's sovereignty was transferred to the British in 1842, Hong Kong gradually surpassed Macao as an important trading port. In an effort to replenish its depleted coffers and diversify its main economic pursuits, the Macao Portuguese government legalized gambling for the first time in 1847. By the 1850s, Macao had over 200 "Fan tan" stalls in operation. The gaming industry began to thrive in the late nineteenth century, and gaming taxes became the government's primary source of revenue. Since then, Macao has become well-known for its casino industry, earning the nickname "Monte Carlo of the Orient."
In 1930, the "Hou Heng Company," led by Fok Chi Ting, was granted the exclusive license to operate all recognized casino game varieties. After obtaining the monopoly concession, "Hou Heng" opened its casino operations at the Central Hotel on Avenida Almeida Ribeiro and the former "Victoria Cinema" (where the Tai Fung Bank is now located). "Hou Heng" was regarded as a gaming industry pioneer because it improved and innovated the vast gaming industry. For example, it lavishly rebuilt and remodeled the casinos, provided free Chinese opera performances, fruits, cigarettes, and snacks to patrons, and purchased ferry tickets on their behalf.
Greyhound racing was first introduced to Macao in 1932 by Fan Che Pang and a group of overseas Chinese and Americans, who later formed the "Macao Canine Club" and built the "Yat Yuen Canidrome." However, at the time, this newly introduced game was not particularly popular.
Although there were horse racing activities as early as 1842, organised races did not start until 1927. The "Club Internacional de Recreio e Corridas de Macau, Limitada," which at the time held the monopoly concession for horse racing, held races in the newly constructed Areia Preta horse racing ground.
In 1937, Macao's casino industry experienced a revolutionary rise. The Portuguese administration of Macao passed a Decree Law that year to unify the operations of several games. The casino monopoly was granted to the "Tai Heng Company," led by Fu Tak Iong and Kou Ho Neng. The "New Central Hotel" on Avenida Almeida Ribeiro was transformed into "Tai Heng's" flagship casino, introducing numerous new western game types as well as Baccarat, the current most popular game.
Later, the Sino-Japanese war erupted, negatively impacting Hong Kong. As a result, the horse and greyhound racing events, which only drew customers from Hong Kong, were cancelled in 1942.
On February 1961, the 119th Macao Governor, Jaime Silvério Marques, declared Macao to be a low-tax region and declared gaming and tourism to be the region's two main economic drivers. In addition, he declared Macao a "permanent gaming region." According to Marques' expanded definition of gaming, games of fortune are any games with unpredictable and randomly generated outcomes that a player wins solely by chance.
MONOPOLY IN THE GAMING INDUSTRY
Before the "Tai Heng" monopoly concession expired on December 31, 1961, Governor Marques and the related department enacted Diploma Legislativo no. 1496 in July of the same year, deciding to liberalize the operations of games of chance for public bidding. Two companies participated in the bidding: a new company founded by Ip Hon, Terry Ip Tak Lei, Stanely Ho Hon San, and Henry Fok, and "Tai Heng," which was already in operation in the market. Finally, the new company won the bidding and was given the monopoly concession to operate fortune games as well as sell "Pou lottery," "Shan lottery," and "Pacapio lottery." The government granted Cheung Kuan Pau's request to resume greyhound racing in August of the same year. After the 8-year concession was approved, the "Yat Yuen Canine Club" debuted in August 1963.
The new casino concessionaire was founded in 1962 as Sociedade de Turismo e Diverse de Macao (S.T.D.M). The city's first casino, "Casino Estoril," opened the same year; however, the landmark Lisboa Hotel and Casino Lisboa did not open until 1970. STDM has dominated the video game industry for over 40 years. Since the company's inception in 1962, more than ten different game types have been approved for use in STDM casinos. Slot machines, Black Jack, Boule, Cussec, and other well-known games are all available.
Ip Hon founded the "Macau Trotting Club" in 1980 to bring harness racing to Macau, but it was not a popular sport. Because the number of wagers had dropped so drastically in 1988, all races had to be halted. The following year, a Taiwanese company purchased the business, flattened the racetrack, and held its first race in September 1989. However, the company was so negatively impacted by a number of negative factors that a financial crisis did not occur until a year later. Finally, STDM paid $1 billion for the company. The races were reintroduced in February 1991.
STDM subsequently introduced pachinko in 1998. In the same year, just in time for the World Cup, the government granted the Macau SLOT Co. Ltd. permission to accept football wagers. However, STDM also purchased the Macau Jockey Club in 1990, eventually becoming Macao's largest gaming operator.
GAMING LIBERALIZATION FOLLOWING THE HANDOVER
Prior to Macao's return to Chinese control in 1999, numerous discussions and studies on the viability of liberalizing the gaming industry were conducted from various perspectives. In reality, the Portuguese Macao Government had considered and planned to abolish the gaming industry's monopoly system. For example, the Legislative Assembly's Law No. 10/86/M of 1986 stated that "the number of concessions granted shall be limited to a maximum of three."
Mr. Edmund Ho Hau Wah, the new chief executive, announced his intention to enlist the help of an experienced international consulting firm in the gaming industry to conduct research on the outlook for the Macao gaming market on December 21, 1999, the day after the Macao Special Administrative Region was formally established. In July 2000, the "Macao Gaming Committee" was formed. The primary responsibility of the Committee was to conduct research on the legal, administrative, and policy aspects of gaming development. At that initial meeting, the Committee decided to hire Arthur Andersen Worldwide to conduct research on the growth of the gaming industry and provide expert advice to the government.
The Legislative Assembly of Macao passed Law No. 16/2001, titled "Legal Framework for the Operations of Casino Games of Fortune," in August 2001. It outlined the operational requirements, the eligibility of major shareholders, casino management, and the gaming tax that had to be paid. After STDM's concession expired on December 31, 2001, the Macao SAR decided to award three gaming concessions in an effort to revitalise the gaming industry and lay a solid foundation for future growth. This decision reaffirms the Macao Special Administrative Region's stated policy direction of "tourism, gaming, conventions, and exhibitions as the "head," and the service industry as the "body," driving the overall development of other industries."
In addition to Law No. 16/2001, Chief Executive Edmund Ho Hau Wah signed Administrative Regulation No. 26/2001 on October 26, 2001, "Stipulating the Open Bidding for the Operation of Casino Games of Fortune and the Eligibility and Financial Capability of the Companies that Participated in the Tendering Process." The Executive Order established the eight-person "Casino Concessions Committee" on October 30, that same year. It was in charge of organising the tendering process and making recommendations to the CEO once the concessions were awarded.
The tendering procedure was formally launched by the Committee on November 2 in accordance with Administrative Regulation 26/2001, and it was completed on December 7 in accordance with the same regulation. Over the course of the period, 21 bid proposals were received from bidders with capital in places such as Macao, Hong Kong, the United States, Malaysia, Australia, the United Kingdom, and Taiwan, among others. Three businesses were barred from proceeding to the final round of bidding because they lacked sufficient documentation. STDM's concession contract was extended for three months after the Macao SAR was unable to award the concession as planned on December 31, 2001.
The Macao SAR announced the results of the bidding on February 8, 2002, and the concession was awarded to Sociedade de Jogos de Macau ("SJM"), a subsidiary of STDM, Galaxy Casino, S.A. ("Galaxy"), and Wynn Resorts (Macao) S.A. ("Wynn"). Concession contracts for the operation of casino games of chance were signed on March 28, April 24, and June 26, respectively. The Macao SAR amended the Galaxy's Concession Contract in December of the same year, allowing Galaxy to have a sub-concession relationship with the Venetians Macao S.A. ("Venetian"). Following the issuance of the first sub-concession, on April 20, 2005, and September 8, 2006, respectively, the SJM and Wynn signed sub-concession agreements with MGM Grand Paradise, S.A. ("MGM") and Melco PBL Jogos (Macau), S.A. ("Melco PBL"). Except for SJM, the other concessionaires and sub-concessionaires all needed time to construct their casinos and other related facilities when the concession winners were announced. They delayed starting their business after receiving the concessions as a result.
The original Venetian casino, Casino Sands, debuted in May 2004. It was an American company's first gaming investment project in Asia. Casino Waldo, the Galaxy's debut endeavor, debuted the same year. In September 2006, the Wynn's first casino hotel officially opened after being dedicated in June 2004. In September 2006, Melco PBL acquired the Mocha slot lounges. On May 2007, Casino Crown (currently Casino Altira), the company's first casino, opened. The first MGM casino started accepting customers in December of that same year.
At the end of 2021, there were 42 casinos in Macao, 25 of which were on the Macao Peninsula and 17 on Taipa Island. The SJM has 23 casinos, followed by Galaxy with 6 casinos, Venetian with 5, Melco Crown (previously known as "Melco PBL") with 4, Wynn with 2, and MGM with 2. Additionally, on July 20, 2018, Macao (Yut Yuen) Canidrome Co. Ltd. declared an end to dog racing.
FORECAST
The Cotai Strip concessionaires' numerous projects will resume, ushering in a new era for Macao's tourism and gaming industries. The Macao government will put forth efforts to improve the quality and standard of gaming project development, strengthen gaming industry regulation, and express grave concern about the various social problems caused by gaming liberalization in order to promote healthy and sustainable growth in the gaming industry. The goal is to transform Macao into a regional tourism destination.
REFERENCE
Chan, Chi & Li, Wai Lim & Leung, Eugene. (2016). The History of Gambling in Hong Kong and Macao. 10.1007/978-981-10-1068-2_1.