Macau has built its reputation on one singularity: being the only region in China where gambling is legal. From legalisation in the nineteenth century under Portuguese administration to the advent of the huge resorts that rival Las Vegas, the history of gambling in Macau tells as much an economic saga as a political destiny.
Macao and China: a unique relationship
Macao is unlike any other Chinese city: since 20 December 1999, when it was handed back by Portugal, the region has operated under a very specific legal and political framework, based on the principle of ‘one country, two systems’. This formula, devised in the 1980s by Deng Xiaoping, was designed to enable Macao and Hong Kong to retain their capitalist economies and separate legal systems for at least 50 years after the handover.
No other Chinese city enjoys such autonomy. Under Macau’s Constitution and Basic Law, Macau has its own executive, legislative and judicial powers, including final justice, while foreign affairs and defence remain the exclusive responsibility of Beijing. The local government is made up of residents and the laws that existed prior to the handover are maintained.
Thanks to this special status, Macao plays a strategic role in China’s opening-up policies. The Special Administrative Region concludes certain international agreements itself, develops its trade relations and improves its attractiveness to tourists – all the while benefiting from its own tax and customs regime, independent of that of the mainland.
This economic flexibility has boosted growth: gross domestic product has risen from around $6.5 billion in 1999 to almost $46 billion in 2023, with a heavy reliance on the gambling sector, which accounts for more than half of this wealth. But this growth is not without its challenges: economic diversification has been a priority for several years, accentuated by Xi Jinping’s directives.
Opening up to gambling
It all began in the mid-19ᵉ century. Then under Portuguese administration, Macau was looking for a stable source of revenue to finance its infrastructure. In 1847, the authorities legalised gambling and imposed a tax on operators. Small gambling dens soon proliferated in the narrow streets of the peninsula.
The colony discovered a fragile balance: on the one hand, gambling money fed the public coffers; on the other, critics denounced the dependence on an activity considered vice rather than industry. But for Macau, isolated from Lisbon and with no major natural resources, gambling became an essential economic pillar.
The Stanley Ho era: the takeover of an empire
In 1962, a major turning point occurred. The government granted the Sociedade de Turismo e Diversões de Macau (STDM), headed by businessman Stanley Ho, a monopoly on the operation of casinos. Under his reign, Macau changed its face.
Ho introduced baccarat, blackjack, roulette and other Western games into the halls that had previously been dominated by Chinese traditions, such as fan-tan. Fast ferries linking Hong Kong to Macau allowed thousands of gamblers to come every day to try their luck.
For almost 40 years, Ho’s name was inseparable from Macau, and his empire made him one of the richest men in Asia.
The arrival of the Las Vegas giants
After Macau was handed back to China in 1999, Beijing pushed for the modernisation of the territory. In 2002, the State ended the STDM monopoly and opened up casino operations to foreign operators.
It was an explosion: Sands, Wynn, MGM and Galaxy built pharaonic complexes, inspired by Las Vegas resorts but adapted to Asian tastes. The Cotai Strip became a gigantic boulevard of gambling and entertainment.
In just a few years, Macau surpassed Las Vegas in terms of revenue. In 2007, it established itself as the world’s leading gambling capital.
The Cotai Strip
At the heart of Macau’s gambling expansion, the Cotai Strip embodies the region’s spectacular metamorphosis. This vast urban expansion project, a piece of land reclaimed from the ocean between the islands of Taipa and Coloane, has increased the space dedicated to leisure activities and casinos tenfold, generating a veritable economic and architectural revolution. The term Cotai itself is the result of a fusion of the names of the two islands, while the expression ‘Cotai Strip’ was born of the marketing imagination of the Las Vegas Sands Corporation and registered as a trademark by the latter.
The project came to fruition thanks to massive embankment work carried out in Seac Pai Bay, extending the territory by almost 5.2 square kilometres. In 2006, the Grand Waldo, owned by the Galaxy Entertainment group, was the first property to open its doors, followed in 2007 by the iconic opening of the Venetian Macao, the largest hotel and casino complex in the area to date.
More than just a line of casinos, the Cotai Strip has adopted a very different representation of the Las Vegas model. Rather than a linear boulevard where the hotels open directly onto the main thoroughfare, the urban planning here is conceived as a grid, leaving the resorts their own architecture and signage independently… a fragmented gambling territory, in both form and scale.
The succession of prestigious establishments (City of Dreams, Galaxy Macau, The Londoner Macao, The Parisian, Wynn Palace, MGM Cotai, Lisboeta and the Grand Lisboa Palace) has turned the Cotai Strip into a veritable boulevard of luxury and entertainment, incorporating gourmet restaurants, top-of-the-range shopping, shows and event infrastructures.
Fortune and excess
In the 2000s and 2010s, junkets – intermediaries specialising in organising luxury trips for wealthy clients – flourished. They advance credit, organise private suites and take commission on players’ losses.
VIP baccarat became the beating heart of the casinos. Colossal fortunes were won and lost in a single night. At the time, almost 70% of Macau’s revenue came from VIP players from mainland China.
But this dependence drew the attention of Beijing, which feared money laundering and capital flight.
Repression and the changing market
From 2014, mainland China launched an anti-corruption campaign. Junkets, which had long been tolerated, were targeted. The final blow came later with the arrests of emblematic figures such as Alvin Chau and Levo Chan, convicted of organising illegal games and money laundering.
This crackdown led to a decline in the VIP segment, but paved the way for a new model: the mass market. Consumer baccarat, slot machines and family entertainment formulas became the new engines of growth.
Tomorrow’s challenges
The Covid-19 pandemic turned everything upside down. With the closure of the borders, Macau found itself deserted. Casino revenues will plummet by more than half by 2020. For an economy that derives 80% of its tax revenue from gambling, the shock was dramatic.
Since the lifting of health restrictions, Macau has seen a spectacular rebound. In 2024, gambling revenues will reach 226.8 billion patacas, or nearly 28 billion US dollars. By 2025, month after month, post-pandemic records were reached, confirming the city’s resilience.
But this prosperity raises an essential question: how can gambling addiction be reduced? Beijing is pushing Macau to diversify into culture, sport, conventions and even technology. Projects are emerging, such as the development of Hengqin, a neighbouring island, which is supposed to host theme parks and business centres.
Will the capital of gaming be able to transform itself into the capital of global leisure? Or will it remain a prisoner of its historical identity?