ECONOMIC ASPECTS
The so-called "Monte Carlo of the Orient," Macau's economy relies heavily on gambling. Nowadays, the gambling industry generates over 40% of the GDP of Macau. Since the early 1960s, around 50% of Macau's official revenue has been driven by the different gambling forms like casinos and sports betting. The percentage remained steady until the late 1990s. In 1998, 44.5% of total government revenue was produced by the direct tax on gambling. Then there was a 9.1% decrease in 1999, probably due to internet gaming.
After the handover of the Macau from Portugal to China, the SAR released gambling licenses to other companies in order to eliminate the monopoly played by the STDM. In 2002, the government signed concession contracts with two Macau gaming companies, Wynn Resort Ltd. and Galaxy Casino. This opened the gambling market for competition and increased government tax revenue significantly. It also attracted more tourists to Macau. At this moment, according to official statistics, gambling taxes from 70% of Macau's government income.
However, the gambling industry is also a source of instability in the Macau economy, as the nature of gambling business is not susceptible to technological advancement or productivity growth. The gambling business is still dependent on the prosperity of other Asian economies, especially that of Hong Kong and the online gambling Hong Kong industry.
Although economically struggling communities are often attracted to the casino development gambling strategy, not everyone can expect to benefit. It has been argued that, holding all else constant, the more urbanized a community is, the less likely it is to benefit from casino development. In large urban areas, especially those that do not ordinarily attract many tourists, customers far more likely will be drawn locally. A useful gambling rule of thumb is that when less than half of the gamblers are derived from outside the area, the industry is likely to have a redistributive effect within the community rather than an expansionary effect connected to exporting tourist services.