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Macao's gaming revenue growth slowdown arouses fears of mass lay-offs
Last Updated(Beijing Time):2008-09-24 11:50
As expectations that Macao's gaming sector will experience a single-digit year-on-year growth in September 2008, the Special Administration Region, the only place in China where gambling is legal, started to feel the pinch after a long lasting boom since opening its gaming sector to international investments in 2002.

The city's gross gaming revenue for the first half of this month only reached 3.6 billion patacas (450 million U.S. dollars), and the whole month is expected to reach between 7.2 billion patacas (900 million dollars) and 7.5 billion patacas (938 million dollars), according to Portugal's Lusa News Agency, which quoted sources from gaming operators.

That means gaming revenues for September will grow by between less than one percent and around five percent, compared with the same period last year. The drop in the gaming revenue growth was largely blamed on the global economic downturn while China's tightening of its visas arrangement which allow mainlanders to travel to the SAR was also blamed as one of the factors on the decrease of game-doers, a source linked to one of Macao's casinos told Lusa.

The slowdown of the sector's development has caused many speculations that it will trigger a domino effect in the sector, forcing several small-scale casinos to be closed one after another and leading to mass lay-offs among dealers and other casino staff.

If the domino effect materializes, the SAR will be dealt a heavy blow, since gaming taxes and levies account for over 70 percent of the SAR government's income, and a large number of lowly-educated citizens worked at the city's 31 casinos as dealers, the jobs of which the government bans non-permanent residents from taking.

Therefore, the SAR's government is quick to deny such predictions. "Gaming revenue growth slowed down...but there are no signs that the sector is shrinking, and the lay-offs are not common for the current stage," said Tam Pak Yuen, the SAR's Secretary for Economy and Finance, when asked about the issue by the press at a public function on Tuesday.

The lay-offs have actually started months ago, when Galaxy Entertainment, one of the six licensed gaming operators in Macao but based in Hong Kong, sacked several dealers and dealer inspectors working at some of its small casinos. The move led to a strong backlash from local communities, and the laid off locals even took to the street to protest against the operator's "rash decision".

The action brought considerable pressure on the government as well, as local communities yelled for job protection from the SAR government. The result was a government demand that the six gaming operators to promote more local employees to higher positions in the casinos, making more job vacancies for locals to fill.

Tam pointed out that the gaming sector is still undergoing a "stable period", and the domino effect of small and medium casinos being closed one after another is not happening at present. "The SAR government understands that local civilians concern about the development of gaming sector, and any insignificant trifle will bring up sensitive reactions, but the adjustment of staff by individual gaming operator can happen at any time."

He also pointed out that if the gaming operators intends to adjust their staff in a large scale, they will need to communicate with the SAR's labor department, but currently no such plan were brought up by these operators.

However, the government's optimism toward the gaming sector was not shared by the experts.

"The near-term economic data and the gross gaming revenues has evidently sounded the alarm for local gaming sector," said Davis Fong, director of Institute for the Study of Commercial Gaming at the University of Macao.

He said that the SAR government should no long expect a significant increase in its gaming tax income, and if the casino companies do not diversify their operations, they will have difficulties running business.

From September till the end of 2008, the gaming sector is expected to see "very slow or even negative growth", Lusa quoted the source as saying.

With regard to the impact on local job market, Fong pointed out that jobs generated by casinos have peaked, although two new casino resort projects, set to be put into operation in the near future, can partly alleviate such employment pressure.

"The society must reach a common consensus on whether to maintain Macao's gaming-led economy or extend vertically diversified development," he said.

He also proposed that since many non-gaming industries, such as hospitality and MICE (Meetings, Incentives, Conferences and Exhibitions), are emerging and taking off in Macao, the government should guide market capitals and operators to invest in these industries, in a bid to create more jobs in the non-gaming sectors.

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