Part B – A study of Gambling Industry Impact – A case study on Economic Impact of
Macao Gambling Industry
Abstract
Many regions have been using gambling industry to bring a lot of revenue. Especially
gambling industry is biggest source of revenue in Macau. It makes up about 50% of the
Macau’s economy. With the entry of large foreign casinos from Las Vegas and Australia,
Macau overtook the Las Vegas Strip in gaming revenues in 2007.
This paper is going to investigate the economic impact of gambling industry in Macau. At
the same time, is there any positive or negative impact in Macau? In the paper, the author
describes the economic impact of Macau by using different data to figure out the impact in
gambling industry.
In this paper, it is based on four data to identify and has an analysis of the impact.
Moreover, this paper is going to analyze little part of other impacts in Macau by gambling
industry and the development of the future. Further, Tourism Economic Assessment Model
(TEAM) will be used to investigate the economic impact on Gambling. They are Gross
Domestic Product (GDP), Employment Rate, Government Tax Revenues and the Industry
input/output will be measure in TEAM. Also, these four dimensions will be applied to
Macau gambling industry. Lastly, the paper will list out some limitation about the study
that author need to modified in the future.
Keywords: Macau Gambling, TEAM, Economic Impact, Tourism
Section 1 – Introduction
In 1847, Macau gambling industry has been legalizing under the governance of Portugal.
From that time, Macau as “Eastern Monte Carlo” name is well known in the world. Now,
gambling industry has become an important part of the economic in Macau. In 2002, 40 %
Macau’s GDP was provided by gambling industry income. Besides, the total income of
Macau has over seventy percent and a half was come from direct taxes by gambling
franchise.
The first gambling franchise had been provided in 1937. As the management of that
company was in old ways, the potential of gambling industry had not been developed. Till
to 1962, Macau government had transferred all the gambling franchise to The Society of
Travelling and Entertainment of Macau Limited) (STDM) and managed. Until now, over
thirty casinos in Macau are working and more than ten casinos are building or planning to
be built. Those gambling activities can be classified to five categories which are casino
gambling, horse racing, dog racing, lotteries all child football betting.
1.1. Reason for choice of topic
According to research, over 109 countries have been approved legalized gambling in the
world. This industry has gained over $US 1000 billion a year. In recent year, casino has
become popular and nearly every hotel has one of it. Most importantly, gambling industry
can help Macau to gain benefits such as increase income, raise GDP, create employment
rate of Macau etc.
Meanwhile, Macau gambling industry has become the largest in Asia. Comparing with
oversea casinos from Las Vegas and Australia, the revenue of gambling in Macau exceeds
Las Vegas Strip staring from 2007(Pic 1). Besides, open gambling being legalized in 2002
made the institutional changes and thus affect the economic structure in Macau. In
addition, gambling being legalized can open the international capital market and Macau
competition mechanism. Besides, it made the rapid growth of Macau’s economy. Before
2002, Macau economic had recorded continued negative growth for four years. After open
gambling legalized, Macau’s GDP has increase. In 2007, the GDP per person has exceeded
Hong Kong and Singapore. The Economic global ranking in 33, it already belongs to rich
region in the world.
At the same time, Macau unemployment rate has continued decreasing (Government of
Macau SAR). According to the rapid development of Macau gambling industry, it made
lots of industry benefits such as Hotel industry, catering industry, building industry etc.
From 2000 to 2007, Macau unemployed people has decreased from 14200 people to 9500
people (Government of Macao Special Administrative Region Statistics and Census
Service, DSEC). On the other hand, almost every tourist traveling Macau will go to casino.
Macau has been creating an image of Gambling city in the world.
Hence, “What economic impact the gambling industries bring to the Macau?” is the core
idea and will be discussed in this report.
1.2. Academic objectives of project
The objectives of this study are distinguished into four aims. First is to examine the
economic impact of Macau gambling industry. Second is to calculate the economic impact
dimensions by using the Tourism Economic Assessment Model (TEAM). Third is to
analyze the benefit and disadvantage to Macau gambling industry. Last but not least, is to
give some improvement or suggestion to Macau government to ameliorate and maintain
the benefit from gambling industry.
1.3. Outline of sections
In this paper, it will be divided into four parts to study.
First, the background of Macau gambling industry and the characteristics will be
introduced. Then, lots of different academicians and literature reviews will be defined by
different terms and theories. Moreover, according to those academician and literature, one
model will be chosen (TEAM) to analyze the economic impact of Macau gambling
industry. Third, the economic impact of Macau gambling industry will be discussed.
After the results and analysis, the result between literature reviews, models and the topic
will be summarized and concluded. Besides, the limitation, defect of this paper will be
recognized and some suggestions will be discussed for further study.
