Macau Casinos Growing Too Fast?

By now, it’s pretty obvious that Macau has bolted ahead of Las Vegas to become the world’s most prosperous gambling market. In fact, Macau’s featured Cotai Strip brings in four times as much revenue as the Las Vegas Strip, and their economy keeps growing with each passing month. But while many people see Macau as a booming gambling goldmine, others think that the region might be growing a little too fast. This being said, it’s worth taking a closer look at the matter to see the downside to Macau’s growth.

The Macau area has around 550,000 residents living within a 12-square-mile area. The special administrative region of China is also home to 33 different casinos - some of which require close to 10,000 worker to run. And there are plenty more companies throughout the world that are essentially on a waiting list to build massive casinos in the city.

As you can imagine, this is creating a major understaffing problem in the bustling gambling hub. Compounding this dilemma is the fact that the Macau government hasn’t exactly made it easy for potential foreign workers to move into the region. In fact, Macau locals are vehemently against foreign laborers since they don’t want to deal with competition for their jobs

The lack of workers hasn’t just affected casinos either because local businesses have struggled to remain sufficiently staffed since most of the workforce migrates to casinos. After all, casinos have increased salaries substantially in order to recruit the best and brightest, so restaurants, clothing stores, bars, and other businesses have to scramble just to find workers.

The staffing problem doesn’t look to be solved any time soon as long as the rate of developing casinos outweighs the number of incoming foreign workers. Fortunately, the government has been making concessions recently to increase the available workforce - despite protests from locals.

A shortage of available workers isn’t the only thing that Macau is dealing with since the local economy is suffering from problems due to the area’s booming success. One problem is the housing market, which has seen house prices rise along with a growing demand. So basically, foreign workers who are finally able to make it into the city have to deal with finding affordable housing afterward.

Perhaps an even bigger problem is the fact that the housing market increase has led to some major inflation over the past few years; the inflation rate is currently at 6% and rising. And as mentioned before, casinos are increasing salaries to attract qualified workers, so this isn’t helping the inflation matter much either. This being the case, some people think that Macau could actually benefit from their economy stumbling a bit.

Like we discussed at the outset, the Macau economy has grown dramatically since the mid-2000’s. And for the longest time, it looked as if this growth would take forever to level off. However, there are some signs that the Macau boom could finally be slowing down, and surprisingly, this could be the best thing to happen to the region since it would solve some of the current problems.

An early sign that the economy could be taking a slight downturn is the falling stock prices of Sands China, MGM China and the Wynn Macau. In addition to this, the rapidly increasing gambling revenues seen by the entire region have begun to slow down lately. One more thing worth mentioning about a potential drop-off in the area includes a predicted Chinese recession, which would certainly discourage Chinese citizens from frequenting Macau.

Now this isn’t to say Macau is going to be supplanted by Las Vegas as the world’s biggest gambling destination, but it does indicate the possibility that the unreal growth could be coming to a close. Of course, when you consider that casinos are having trouble finding workers, inflation is increasing, and housing prices are going through the roof, perhaps it wouldn’t be the worst thing if Macau saw their gambling revenue diminish somewhat.