UNLV Theses, Dissertations, Professional Papers, and Capstones
5-1-2015
The Economic and Social Effects of Casino Development in The Economic and Social Effects of Casino Development in
Macau Macau
Christopher Benton
University of Nevada, Las Vegas
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Benton, Christopher, "The Economic and Social Effects of Casino Development in Macau" (2015).
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Theses, Dissertations, Professional Papers, and Capstones
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THE ECONOMIC AND SOCIAL EFFECTS OF CASINO DEVELOPMENT IN MACAU
THE ECONOMIC AND SOCIAL EFFECTS OF
CASINO DEVLOPMENT IN MACAU
by
Christopher W. Benton
Master of Business Administration
Lee School of Business
University of Nevada, Las Vegas
Bachelors of Science in Business Administration
Sonoma State University
Spring 2010
A professional paper submitted in partial fulfillment of the requirements for the:
Master of Science in Hotel Administration
Department of William F. Harrah College of Hotel Administration
University of Nevada, Las Vegas
Graduate College
University of Nevada, Las Vegas
May 2015
Chair: Dr. Toni. Repetti
THE ECONOMIC AND SOCIAL EFFECTS OF CASINO DEVELOPMENT IN MACAU!
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Abstract
This paper explores the economic impacts that took place in Macau after the gaming
monopoly ended in 2002, as well as the resulting social effects to the local region. The broader
research on casino gaming was analyzed, and was then compared to the social and economic
impacts that took place in Macau. Specifically, economic indicators such as employment and
GDP were evaluated, along with social issues such as problem gambling, crime, and educational
attainment. Many countries, specifically Asian countries, are now entertaining the idea of
introducing casinos to their local communities in an effort to try and replicate the type of
economic growth that was experienced in Macau. The difficulty for these regional governments
is trying to understand whether the results that took place in Macau are transferable to other
Asian countries. This paper assists in answering this question, and details the unique variables
that surrounded Macau’s casino development.
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Table of Contents
Abstract ........................................................................................................................................... ii
List of Tables/Figures .................................................................................................................... vi
Part 1: Introduction .......................................................................................................................1
Introduction ................................................................................................................................1
Purpose .......................................................................................................................................2
Justification ................................................................................................................................2
Theoretical and Conceptual Framework ....................................................................................3
Statement of Problem .................................................................................................................3
Limitations .................................................................................................................................3
Part 2: Literature Review .............................................................................................................5
Introduction ................................................................................................................................5
Economic Effects of Casino Gaming .........................................................................................5
Positive Economic Effects ..................................................................................................6
Tax Revenue ........................................................................................................................6
Employment .........................................................................................................................6
Local Industries ....................................................................................................................7
Negative Economic Effects ................................................................................................8
Tax Revenue ........................................................................................................................8
Employment .........................................................................................................................9
Local Industries ....................................................................................................................9
Economic Cash Flow .........................................................................................................10
Substitution Effect .............................................................................................................11
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Economic Impacts of Macau’s Casino Development ..............................................................11
GDP & GDP per capita ......................................................................................................12
Visitation ............................................................................................................................13
Gaming Tax & Gaming Revenue ......................................................................................13
Employment .......................................................................................................................14
Income ................................................................................................................................15
Social Effects of Casino Gaming .............................................................................................16
Social Costs ........................................................................................................................16
Crime ..................................................................................................................................17
Pathological Gambling/Family Issues ...............................................................................18
Recreation and Entertainment ............................................................................................19
Traffic ................................................................................................................................20
Life Quality ........................................................................................................................20
Community Improvements ................................................................................................21
Social Impacts of Macau’s Casino Development ....................................................................21
Education ...........................................................................................................................22
Problem Gambling .............................................................................................................22
Crime ..................................................................................................................................23
Traffic ................................................................................................................................24
Infrastructure ......................................................................................................................24
Entertainment & Recreation ..............................................................................................25
Life Quality ........................................................................................................................26
Summary ..................................................................................................................................27
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Part 3: Analysis and Conclusion .................................................................................................29
Introduction ..............................................................................................................................29
Analysis of Macau’s Casino Development ..............................................................................29
Economic Impacts ..............................................................................................................29
Social Impacts ....................................................................................................................31
Conclusion ...............................................................................................................................34
Recommendations ....................................................................................................................35
References .....................................................................................................................................36
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List of Tables/Figures
Figures
Figure 1: Macau’s total GDP and GDP per capita ...................................................................12
Figure 2: Total Macau visitation and Chinese tourists ............................................................13
Figure 3: Gross gaming tax and gross gaming revenue ...........................................................14
Figure 4: Total employment, gaming employment, and % of gaming employment ...............15
Tables
Table 1: Output by Revenue Source: Commercial Gaming Industry ........................................8
Table 2: Number of Student Drop-Outs in Macau ...................................................................22
Table 3: Crime rates and gambling related crimes in Macau ..................................................23
Table 4: Vehicle Transportation Data ......................................................................................24
Table 5: Number of Entertainment and Recreation Facilities .................................................26
Table 6: Inflation Rate in Macau .............................................................................................27
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PART ONE
Introduction
Macau, also known as “Las Vegas of the East” is currently the largest gaming market in
the world. In 2013 total gaming revenue in Macau was $45.1 billion, compared to Las Vegas
Strip gaming revenue of $6.5 billion during that same year (UNLV Gaming Research, 2014).
Although casino gaming in Macau has been legal since 1850, it wasn’t until the end of the
gaming monopoly in 2002 that the gaming market began to increase at a historically high rate.
Over the course of the last thirteen years, gaming has expanded throughout the region and has
become the mecca of casino gaming throughout the world.
Macau is believed to be the oldest economy in the world that relies on legalized gambling
(Vong & McCartney, 2005). Macau was transferred to the People's Republic of China in 1999
and became a special administrative region of China. In 2002, the Chinese government decided
to end the gambling monopoly “Sociedade de Turismo e Diversões de Macau” or STDM which
was in place since 1962 (Chan, 2000). The government granted three concessions, which later
became six, to the original concessionaire and a significant number of foreign enterprises. These
included STDM, Wynn Resorts, Las Vegas Sands, Galaxy Entertainment Group, MGM, and
Melco. As of 2015, there are eleven casinos that make up the Macau Peninsula and Cotai Strip.
Over the course of the next three years, a number of new megaresorts are set to open on the Coati
Strip, which will increase the number casinos in the region (Schaper, 2013).
Although there are a vast number of measurements that can be used to gauge the impact
of gaming development in Macau, the goal of this paper is to understand the key economic and
social indicators that define the region. Economic measurements such as GDP, employment, and
tax revenue will be quantified to give a better understanding of how the Macau economy
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changed after 2002. These results will then be compared to current research regarding the
general economic effects of casinos. A similar analysis will be done for the social effects,
however many social measurements encompass a variety of variables that are unique to a
specific region. This paper will analyze the effects on crime, education, problem gambling, and
the overall quality of life in gaming communities.
Purpose
This study examines the economic and social effects that occurred after the end of the
gaming monopoly in Macau. The central question is whether these outcomes are consistent with
the literature regarding the regional effects of new casinos. Thus, the purpose of this paper is to
determine if these outcomes are consistent with gaming research.
Justification
Due to the significant economic benefits and tax revenues that were generated by the new
Macau casinos, many other Asian countries are entertaining the idea of legalizing casino gaming.
Their motivation is based on achieving a similar type of economic windfall that Macau has
experienced. However, achieving similar results may be difficult due to the different cultural,
governmental, and economic policies of each country. Countries such as Vietnam, the
Philippines, and Japan are potential gaming markets projected to have gaming revenues of $3.0,
$3.5, and $15.1 billion, respectively (Lai, 2014). To insure the accuracy of such projections, it is
necessary to understand if the results in Macau may be transferable to other Asian countries.
This paper aims to fill this research gap, and create a starting point for potential Asian gaming
markets.
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Theoretical and Conceptual Framework
The first section of the literature review will cover the general economic effects of
casinos. This includes issues such as GDP, employment, and tax revenue within gaming
communities. The economic effects that took place in Macau will then be analyzed using similar
measurements. The second part of the literature review will focus on the social impacts of
gaming, and how the introduction of new casinos affects the social environment of local
communities. The social effects that took place in Macau will also be analyzed to understand
how the region adapted to the casino development in 2002.
Statement of Problem
As more Asian countries start to entertain the idea of allowing casinos in their local
communities, it is necessary for governments to understand the economic and social effects that
may result from the introduction of new casinos. Given the significant economic benefits that
were experienced in Macau, many Asian countries are attempting to replicate this type of
economic growth through new casinos of their own. However, the circumstances surrounding
Macau are very unique compared to other Asian countries. This paper will compare the effects
that took place in Macau, and analyze whether these results can be expected in other Asian
countries.
Limitations
Although significant economic and social effects occurred after the gaming monopoly
was eliminated, this paper does not go into detail regarding the regional effects that took place
before 2002. Although the government limited casino expansion during this time, there were
still casinos in operation that served the regional market. How these original casinos affected
Macau’s economy and social climate is a question for future research. Due to the ambiguity of
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many social measurements, this paper is also limited on the specific social effects that can be
compared with past literature. The methodology behind many social measurements can vary
greatly from one research paper to another, which makes comparing such findings extremely
difficult. Finally, the paper does not create comparable measurements from other Asian
countries. Although comparing economic, social, cultural, and governmental policies from other
countries would serve useful, the robust research needed to complete such a study is outside the
scope of this paper.
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PART TWO
Introduction
Given the qualitative differences between economic and social measurements, the
literature review is organized into four different sections. The research presented in these
sections will help clarify the unique effects that took place in Macau, and whether these results
can be expected in other Asian countries. The first two sections analyze economic research
regarding the economic effects of casinos and the actual effects that took place in Macau. The
last two sections focus on the social effects of casino gaming, and how they compare to what
actually happened in Macau. Although the economic and social measurements may not be
identical for comparison purposes, this literature review creates a comprehensive overview of the
effects that took place in Macau, and how these effects align with gaming research.
Economic Effects of Casino Gaming
When analyzing the economic impacts of a tourism based business, it is necessary to start
with the multiplier process. This process measures the amount that an endogenous variable
(spending) changes in response to a change in some exogenous variable (new casino) (Walker,
2013). The biggest challenge with measuring the multiplier effect is the complex process of
collecting the data and determining an appropriate number of parameters.
The most utilized method for measuring the multiplier effect in a casino setting involves
input–output measures and tourism expenditure modeling (Ryan, 2003).!!There is additional
research that classifies three stages of the multiplier process (Witt, Brooke, & Buckley, 2013).
These stages include the direct effect (only occurring in the industry that is immediately
affected), indirect effect (inter-industry reaction), and induced effect (changes in household
income).
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Positive Economic Effects
Tax Revenue. The most significant economic benefit that a casino can contribute to a
region is the increase in tax revenue for the government (Anderson, 2005; Gu & Li, 2009). The
American Gaming Association’s State of the States publication reported total commercial U.S.
gaming tax revenue of $8.6 billion in 2012 (American Gaming Association, 2013). Although
empirical studies of gambling industries and their effects on state budgets are limited, research
has been done on state lotteries. Kearney (2005) examined household expenditure data from
1982 to 1998, in which 21 states implemented a state lottery. In her report, she studied the
source of lottery ticket expenditures. Kearney (2005) concluded that spending on lottery tickets
is generated by a reduction in none gaming expenditures, suggesting that other forms of
gambling are not impacted by a lottery. This may result in lotteries increasing state revenues
since the lottery tax is significantly higher than other types of expenditures. A study that
supported this finding is Borg, Mason, and Shapiro (1993), who found that $1 in lottery revenue
resulted in a decline of 15-23 cents in other types of government revenue, particularly sales and
excise tax, but that the lottery led to an overall increase in revenue. Fink, Marco, and Rork
(2004) also studied this effect, and came to a similar conclusion.
Employment. In addition to tax revenue, there are studies suggesting that casino gaming
increases economic benefits by the addition of regional employment opportunities. When
researching the difference in employment between counties with and without casino, Cotti
(2008) found that counties with casinos see an increase in employment after casinos open. The
study also concluded that casinos create benefits to employment and wages in the areas
surrounding casinos, and that the employment growth effect is inversely related to county
population. This is also supported by Long (1996) who found that casinos create direct jobs that
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are created from the actual gaming operations and indirect jobs created by the supporting
industries. The University of Chicago’s National Opinion Research Center (NORC) found that
populations closest to casinos experienced a 12% to 17% decrease in welfare assistance,
unemployment rates, and unemployment insurance after the introduction of casino gaming.
Local Industries. In addition to direct economic benefits, casinos can also improve
opportunities dealing with recreational, leisure, construction, and entertainment activities within
the region. This is due to casinos offering other types of entertainment, such as restaurants, bars,
lounges, and shopping outlets (Buultjens, 2006). The degree in which each industry benefits
from casino gaming depends on the type of services that support the casino.
As previously mentioned, there are three types of economic effects that casinos
contribute to: direct, indirect, and induced effects. Direct effects deal with the economic impacts
within the industry that is being affected (Andersen, 1996). For example, the jobs needed in the
day to day operations of the casino would constitute direct effects to the regional economy.
Indirect effects occur from the increase in sales and employment by suppliers of goods and
services associated with the maintenance, construction, and operation of a casino (Andersen,
1996). Induced effects occur from the increase in spending by individuals whose income rises as
a result of the direct or indirect activity created by the casino (Andersen, 1996). Table 1, which
was prepared for the American Gaming Association, shows the total direct, indirect, and induced
outputs that were generated by commercial casinos in the U.S. in 2010. Commercial casinos
directly created $49.7 billion in consumer revenue from casino operations, hotel, food and
beverage, and other types of businesses (Bazelon, Neels, & Seth, 2012). More than two-thirds of
this spending was created by actual gaming activities located in the casino. To give a complete
and accurate total, both indirect and induced effects were added in to illustrate what the gaming
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industry means to the entire U.S. When indirect and induced impacts are added in, the industry
creates an additional $76 billion in spending and 470,000 new jobs (Bazelon, Neels, & Seth,
2012).
Table 1
Output by Revenue Source: Commercial Gaming Industry (in billions)
Source
Gaming
Food &
Beverage
Hotel
Other
Total
Direct
$34.6
$6.5
$5.1
$3.5
$49.7
Indirect
$19.8
$5.4
$3.6
$2.2
$31.0
Induced
$30.8
$6.4
$4.6
$3.2
$45.0
Totals
$85.2
$18.3
$13.4
$8.8
$125.7
Output by Revenue Source (Bazelon, Neels, & Seth, 2012)
A comprehensive study that tested whether casinos create economic growth was done by
Rose (1998). In his report he reviewed 36 major studies and other writings on economic impacts
of casino gambling/gaming, and used the results from these studies to test whether casinos bring
economic growth to hosts communities. Rose concluded that a new casino, of even limited
attractiveness, which is placed in a market that is not already saturated, will yield positive
economic benefits to its host economy.
Negative Economic Effects
Given the complexity of measuring the economic impacts of casinos, there is also a
significant amount of research that suggests that casinos do not create the type of economic
surplus that gaming companies propose.
Tax Revenue. In contrast to Borg, Mason and Shapiro (1993), Fink, Marco, and Rork
(2004) found that overall state revenues decrease when lottery revenues increase. Although both
studies only analyze lottery gaming, the disagreement in tax revenue generation is quite
significant. In their study regarding the correlation of gaming and recreational taxes, Siegel and
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Anderson (1999) found that a 10% increase in gambling tax revenue led to a 4% decline in tax
revenue from other amusement and recreation sources. However, they did not find any
consistent negative effect on other types of tax revenues. Popp and Stehwien (2002) used a
similar method to evaluate the impact of New Mexico’s eleven Indian casinos. The report
analyzed quarterly state tax data from 1990 to 1997 and concluded that the casinos had a
negative effect on overall state tax revenue. More specifically, the study found that the
introduction of the first Indian casino decreased county tax revenue by 1%, while introduction of
the second casino decreased county tax revenue by 6%.
Employment. Although there is significant research that suggests that casinos create
jobs for host communities, there are many studies that contradict these findings. Garrett (2004)
concluded that casinos do not create local employment if they are built in rural or developing
communities, where the labor force may be unskilled, since many casinos will likely hire more
skilled labor from surrounding areas outside of the host community. In addition, Grinols (1994)
found that new casinos built in Illinois did not create significant job opportunities in the state.
Goodman (1994) found that the opening up of a casino may displace local workers and residents
as well. He stated that casino gaming can be viewed as ‘‘an economy within an economy’’ since
the job creation of a new casino generates very little spillover effect. Most of the newly created
jobs will not benefit the host community since casinos will not hire underprivileged residents
who lack the necessary skills.
Local Industries. Other conflicting research lies in the effects that casinos have on
surrounding industries. Goodman (1994) and Grinols (2004) suggest that the expansion of
casinos will increase the cost of production for local industries and make them more vulnerable.
Since casinos are often full-service facilities that offer an array of goods and services such as
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dining, retail, and lodging, local enterprises struggle to compete and may be “cannibalized” or
even driven out from the economy. Local customers may also patronize the casino's facilities,
which will decrease the amount that they spend on local businesses (Rephann, Dalton, Stair, &
Isserman, 1997). As noted by Oddo (1997), during the initial four years when casinos began
operation in Atlantic City, NJ, the number of retail businesses declined by 33%, and the number
of restaurants decreased by 40%. Room, Turner, and Ialomiteanu (1999) also concluded that the
local population will decrease spending on other entertainment options after the opening of a
new casino. The economic improvements created by a new casino will only benefit certain types
of industries instead of the entire economy. Casinos may even create negative effects on the
sources, revenues, and job opportunities of other industries, and as a result may deteriorate their
development (Wan & Kong, 2008). For example, Truitt (1996) concluded that riverboat casinos
in Illinois did not create the expected tourism or economic growth, since customers did not stay
in the riverboats long enough to accommodate the hotel rooms or eat at the local restaurants.
Economic Cash Flow. Although casino gaming may be regarded as a kind of “trade”
which may generate positive economic effects, the local population would not benefit if casinos
are unable to entice outside customers to visit the casino. In a way, casino gaming is a kind of
export service industry. The more gamblers and tourists that come from outside the host
community, the more gambling goods and services will be ‘‘exported’’, and the more likely local
residents will benefit from the economic growth (Eadington, 1995). The degree in which the
local population will benefit relies solely on the actual number of gamblers and tourists that
come from outside of the community. In support of this view, Rose (1998) studied future growth
potential of adding additional casinos in gaming centric communities. He found that future
growth for these communities would be less than what had been experienced in the past, since it
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would be more difficult to attract tourists given the already existing casino. Even if casinos
succeed at attracting the necessary amount of outside tourism into the community, the presence
of a foreign owned casino may direct cash flow outside of the local economy. Rose (1995)
suggests that if casino operators are non-locals, what they earn in the local economy will
eventually be sent out of the region.
Substitution Effect. As previously mentioned, any economic activity created by casinos
may come at the cost of activities in other industries. Thus, the addition of casinos only shuffles
spending among industries. Any benefit to employment or income may be canceled out by
losses in existing industries that see a decrease in business, which in turn decreases employment.
This theory is known as “industry cannibalization” or the “substitution effect” (Walker, 2013).
Wichita State (2007) concluded that 50% of new jobs that are created by casinos are generated
by substitution of existing jobs. If a casino is expected to hire 300 people, there will be a direct
benefit of 150 new jobs into the economy. The study also concluded that nearly 73% of all
gaming revenue is generated from other spending within the community.
Additional studies focusing on river boat gambling in Indiana have produced similar
results. Siegel and Anderson (1999) found that riverboat gaming in Missouri led to a movement
of revenue from businesses that could substitute for gaming activity. These businesses included
entertainment, recreation and other tourism related sectors. Anders, Siegel, and Yacoub (1998)
also found that after two Indian casinos were built in Maricopa County, AZ, employment and
retail sales in the local economy declined.
Economic Impacts of Macau’s Casino Development
The rapid growth of the gaming industry in 2002 represented the turning point of
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Macau’s economy. When the Macau government was created in 1999, the economy was still
recovering from the Asian financial crisis. As will be demonstrated in the following sections,
key economic measures such as gross domestic product (“GDP”), GDP per capita, employment,
and tax revenue, experienced immediate year-over-year (“YOY”) growth once the gaming
monopoly ended. This rapid growth continued until 2009, as the global market adapted to the
U.S. economic recession.
GDP & GDP Per Capita
The choice to end the gaming monopoly created instant growth in GDP and per capita
GDP. When the gaming monopoly ended in 2002, total GDP and GDP per capita increased
10.3% and 9.2% from the following year (DSEC, 2010a) (Figure 1). This was significantly
higher than the previous year’s YOY growth, which was 1.5% and 0.7%. This high growth rate
continued even during the economic recession in the U.S. In 2008, the Macau economy still
recorded a 10.7% increase in per capita GDP. Not until 2009 did the rate decrease by 1.6%,
which is not considered significant given the economic downtown in the U.S. (Hung & Zheng,
2011).
Figure 1. Macau’s total GDP and GDP per capita (DSEC, 2010a)
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Visitation
This large economic expansion would not have been feasible without the large addition
of tourists, specifically visitors from mainland China. The creation of the IVS (Individual Visit
Scheme) in 2003, which allowed mainland Chinese tourists to enter Macau and Hong Kong on a
leisure basis, increased the total visitation to 16.6 million in 2004 (Hung & Zheng, 2011). This
represented an increase of 40.3% from the previous year. Prior to 2003, Chinese tourists could
only visit Macau and Hong Kong during business trips or group tours (Legislative Council
Secretariat, 2014).!!Since the creation of the IVS, mainland visitors have accounted for more than
50% of total visitation to Macau. With the completion of more casinos in 2007, total visitation
reached 27.0 million during that year. This represented a 250% increase in total visitation from
1999, and an 800% increase in mainland visitors (DSEC, 2010b) (Figure 2).
Figure 2. Total Macau visitation and Chinese tourists (DSEC, 2010b)
Gaming Tax & Gaming Revenue
As a result of the increase in tourist arrivals, an increase in gross gaming revenue also
took place. This supports the ‘‘export’’ theory of casino gaming discussed in the previous
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section. While gaming revenue increased by 66.1% between 1999 and 2002, the start of the IVS
and the creation of the first foreign-based casino caused gaming revenues to increase by 300%
from 2003 to 2009 (Hung & Zheng, 2011). Although total visitors dropped by 15.1% during the
2008 U.S. economic recession, gaming revenues still increased during the year.
In addition, the rapid growth of government gaming tax also increased at an extremely
high rate. In 2000 and 2001, total gaming taxes were MOP 5,646 million ($706.5 million) and
MOP 6,292 million ($787.3 million), respectively (DSEC, 2010c) (Figure 3). However, in 2005
and 2009, total gaming taxes reached MOP 17,318 million ($2.2 billion) and MOP 44,309
million ($5.5 billion). Between the years 2002 to 2009, total gaming tax revenue increased
470.6%, which represented an average annual increase of 67.2% (DSEC, 2010c).
Figure 3. Gross gaming tax and gross gaming revenue (DSEC, 2010c)
Employment
Before the first foreign-based casino was built in 2004, gaming employment had never
accounted for more than 10% of total regional employment in Macau. With the extensive
expansion of casino development, the number of casino jobs increased significantly. In 2004,
2006, and 2008, the percentage of gaming employment in relation to total regional employment
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increased to 10.5%, 16.1%, and 20.6%, respectively (DSEC, 2010d) (Figure 4). The global
economic recession only had a minor impact on the gaming labor market, as can be seen in the
slight decrease to 19.7% in 2008. Not only did gaming taxes increase after the expansion of new
casinos, but total gaming and regional employment also increased at an extremely high rate
(Hung & Zheng, 2011).
Figure 4. Total employment, gaming employment, and % of gaming employment (DSEC, 2010d)
Income
Macau has significantly increased tax income to the region. The city has enjoyed surplus
revenue since 2002, which has led to an increase in personal income for Macau residents. The
average monthly wage of local citizens increased from $581 in 2002 to $1,080 in 2009 (DSEC,
2009a). Average wages in the tourism/gaming industry increased from $2,460 in 1999 to $3,613
in 2008 (DSEC, 2009a). In addition, personal income increased due to the governmen.t giving
citizens cash allowances of $635 in 2008 and $740 in 2009 (Vong, 2010).
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Social Effects of Casino Gaming
Due to the complexity of social variables, social issues are viewed as the most difficult
subject for researchers to measure (Oh, 1999). Some of the most common social effects deal
with crime, problem gambling, and the quality of life. Many opponents of gaming suggest that
the social “costs” of gaming outweigh the economic benefits that casinos bring. Many different
measurement techniques are used to quantify the actual costs of these social issues. Before we
can evaluate each type of social cost, it is necessary to start with the technical definition and
methodology behind measuring social costs.
Social Costs
Many studies use the term “cost” to accurately measure the social impact of casino
gaming. This has resulted in the term “social cost” being used as the standard measure to
illustrate the different types of social impacts. This approach, which is based on economic
effects to evaluate social costs, has caused many controversial arguments regarding the actual
definition of social costs and how they should be measured. Walker (2007) suggests that a
different methodology is needed when evaluating the social costs of gaming. He recommends
that three key criteria are needed in order to classify an effect as a social cost of gambling. These
three criteria include: (1.) The cost must be social rather than personal or private, (2.) The cost
must decrease societal wealth, (3.) The cost must be generated solely from casino gambling.
Even if the impacts are measured accurately, there could be many factors (such as community
size and the scale of casino development) that might result in different positive and negative
social impacts on host communities (Eadington, 1996). A detailed study by Fong, Fong, and Li
(2011) found seven unique social costs that may occur when a casino is added to a community.
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These social costs include treatment costs, prevention costs, psychological impacts, legal fees,
rent-seeking costs, government expenses, and public costs (training, promotion and research).
Crime
Casinos have long been assumed by the greater population to be connected with crime,
particularly organized crime. However, most casinos are now owned by corporations, which are
highly regulated by the government (Walker, 2013). The real question is whether these casinos
have resulted in an increase in local crime such as theft, abuse, and other offenses. Research
regarding the relationship of casinos and crime have proven inconclusive
Early studies suggest that the introduction of a new casino will result in an increase in
crime for the host community. Grinols and Mustard (2006) represents one of the most
comprehensive studies done on the relationship between casinos and crime. The study analyzed
the crime rate between two years prior to casino introduction and five years after the casino was
built. These crime rates were then compared to communities without casinos. The study found
that crime rates in communities without casinos were lower than communities with casinos.
Additionally, the study found that casinos appear to increase crime at around four years after the
introduction of the casino (Grinols & Mustard, 2006).
Additional studies also support the theory that casinos increase crime in local
communities. Evans and Topoleski (2002), who studied the effects of tribal casinos, found that
approximately 8% of regional crime could be attributed to casinos. The study estimated that the
cost of casino crime was $75 per adult per year in the U.S. Stokowski (1996) evaluated two
Colorado cities and analyzed crime data before and after casinos were implemented. The study
concluded that crime had increased after casino gaming was introduced to the area. Similarly,
Long (1996) used the same methodology for towns in South Dakota and found similar results.
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The most significant research that suggests that casinos do not increase crime is Reece
(2010). The study utilized the same model from Grinols and Mustard (2006), but added
additional variables. These variables included casino activity, tourism volume, and law
enforcement. The study concluded that there was limited evidence that connected casinos with
an increase in crime. Although certain types of crime did go up, these increases were most
likely generated from the excess tourism volume and new hotels that were built in the area.
Although the model focused exclusively on Indiana crime statistics, other studies such as Janes
and Collison (2004) and Giacopassi, Nichols, and Stitt (1999), who utilized tribal and
commercial casinos in numerous states, came to similar conclusions.
Pathological Gambling/Family Issues
Another debated topic is whether casinos have negative effects on pathological gaming
and the need for social assistance. Similar to the studies on casino crime, current literature
regarding these issues have produced mixed results. Janes and Collison (2004) found that
problem gambling had increased in select gaming communities from 1995 to 2000.
Additionally, city leaders stated that problems dealing with child neglect and family issues had
become more widespread during that time period. Thompson and Schwer (2005) evaluated the
dollar amount of the social costs of gambling in southern Nevada and found that each
pathological gambler cost $19,711 in social costs. In contrast, other studies such as Braunlich,
(1996) and Room, Turner, and Ialomiteanu (1999), suggest that there is no significant evidence
that proves that casinos create problem gambling. The two studies argued that individuals who
are pathological gamblers will participate in some form of pathetical activity regardless of if
gaming is locally available.
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Many opponents of casino gaming also point to the negative family issues that are caused
by gambling. Long (1996) compared the social issues in gaming and nongaming communities,
and found that there was an increase in child protection, marriage treatment, and other social
programs in gaming centric regions. In addition, Giacopassi, Nichols, and Stitt (1999) found that
the total number of social workers had increased in communities with casinos. The study also
concluded that local casinos add stress to individuals with existing financial and social problems.
These individuals are often referred to social service providers and economic development
officers to obtain assistance. Chhabra (2007) studied the perception of casino gaming in Iowa
and found that residents perceived that there was an increase in bankruptcies, mental health
issues, domestic violence, financial difficulties, and alcohol/drug abuse. Long (1996) found that
the need for social service programs increased in gaming communities, however the need for
financial support decreased. Similarly, Hsu (2000) found that many gaming communities saw a
reduced need for financial services once gaming was introduced to the area.
Recreation & Entertainment
In many cases, the addition of a casino may enhance the recreation, leisure, and
entertainment options of the local region. Janes and Collison (2004) evaluated the views of city
leaders in Indian gaming communities over a five year period. The study found that although
entertainment choices such as hotels and restaurants were available, customers limited their
participation to gaming activities instead of participating in other recreational activities. In
support of these findings, Room, Turner and Iomiteanu (1999) found that customers spent less
money on other entertainment options because of the opening of new casinos. Other studies
have found that there is no improvement to recreation options once a casino is introduced to a
region (Carmichael, Peppard, & Boudreau, 1996; Long, 1996).
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Traffic
For casinos to generate economic benefits for host communities, it must draw in visitors
from outside the local area. It has been suggested that this increase in tourism negatively
impacts traffic conditions in the region. Long (1996) surveyed citizens of South Dakota and
Colorado and found that residents believed that casinos had a negative impact on traffic
congestion and overcrowding. Stokowski (1996) also noted a 200% increase in traffic volume
on Colorado’s Highway 119 during the first month following the opening of new a casino.
Carmichael, Peppard and Boudreau (1996) studied the perception of local residents of gaming
centric communities in Connecticut, and found that casinos had led to an increase in traffic
problems and driving hazards.
Life Quality
Another issue that is often brought up by gaming opponents is the negative impact that
casinos bring to the overall quality of life for local residence. Given the ambiguous nature of
measuring life quality in gaming communities, the research regarding this issue has resulted in
mixed results. Giacopassi, Nichols, and Stitt (1999) interviewed 128 community leaders in
seven gaming jurisdictions and found that 59% of them favored having casinos and 65% noted
that casinos increased the quality of life for the community. Gonzales, Lyson, and Mauer (2007)
connected casino gaming with an increase in the quality of life in terms of the social and
economic well-being in Arizona and New Mexico. The variables that were used to measure life
quality were house prices, poverty, income, employment, and home ownership. A more focused
study on property values found that house prices in gaming communities increased over a 10
year time span, however house prices increased even more in nongaming communities (Janes &
Collison, 2004).
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Other studies have concluded that casinos decrease the sense of community within a
region and decrease the overall quality of life. For example, Long (1996) found that Colorado
citizens did not believe that local casinos made their community a better place to live. Roehl
(1999) concluded that only 33% of local Nevada residents believed that local casinos increased
the quality of their life, although 50% agreed that casino gaming had made Nevada (as a whole)
a better place to live. Pizam and Pokela (1985) evaluated resident’s views on a hotel/casino
resort in the Adams and Hull regions of Massachusetts. The results indicated that residents did
not perceive that the casino improved their standard of living, but instead increased their cost of
living.
Community Improvements
In some cases, new casinos may result in community improvements to local
infrastructure, facilities, and regional planning. Casino gaming in Atlantic City, NJ, was found
to have led to the improvement of tourist and convention facilities and increased infrastructure
and tourism capacity (Nicholas, 1998). Stokowski (1996), however, found that the Colorado
gaming towns of Black Hawk and Central City, experienced a lack of development control and
stated that gaming companies had served their own interests at the expense of local residents.
Social Impacts of Macau’s Casino Development
Although the economic health of Macau has significantly improved since the beginning
of casino development in 2002, many studies have tested whether these developments have
negatively affected the social climate of the region. Given the difficulty in measuring social
costs, many of these findings are limited by the specific variables in the research. In addition,
there is also conflicting research regarding the majority of issues such as crime levels, problem
gambling, and overall life quality.
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Education
The number of total school drop-outs increased from 1,986 in 2002/2003 to 2,388 in
2006/2007 (Education and Youth Affairs Bureau, 2009). As can be seen by Table 2, the drop-
out rate was particularly high among junior high school students (Secondary 1 to Secondary 4).
This may have been due to good employment opportunities created by casino development, and
the low education level necessary for entry level positions such as dealers or waitresses
(Education and Youth Affairs Bureau, 2009). This resulted in only 66% of secondary school
students managing to finish their education.
Table 2
Number of Student Drop-Outs In Macau
Year
P1
P2
P3
P4
P5
P6
S1
S2
S3
S4
S5
S6
Total
2002/2003
67
57
73
91
125
119
310
316
359
258
131
80
1986
2003/2004
78
80
74
70
129
146
437
366
316
374
217
115
2402
2004/2005
64
44
45
72
88
111
513
352
371
353
220
125
2358
2005/2006
45
47
45
47
81
104
344
370
361
383
207
172
2206
2006/2007
56
39
40
75
97
118
430
388
323
401
234
187
2388
Number of student drop-outs in Macau (Education and Youth Affairs Bureau, 2009)
Problem Gambling
According to the Institute for the Study of Commercial Gaming at the University of
Macau (ISCG, 2009), the total number of problem gamblers in Macau grew from 4.3% in 2003
to 6.1% in 2007. This supports the findings of Chan (2011) that found that the number of
problem gamblers in Macau was directly linked to the number of gaming options in the region.
However, problem gambling decreased in the surrounding cities of Hong Kong and Singapore
(ISCG, 2009). In Hong Kong, the total number of problem gamblers decreased from 5.9% in
2001 to 4.5% in 2008, whereas the total number of problem gamblers in Singapore dropped from
4.4% to 2.9% from 2004 to 2008 (ISCG, 2009).
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Crime
Since the end of the gaming monopoly in 2002, total crime in Macau has increased
significantly, from 9,088 incidents in 2002 to 13,864 in 2008 (Judiciary Police of the Macao
SAR Government, 2010). Total crime increased considerably in 2005, when the Individual
Visitation Scheme (IVS) was created to permit more visitors from China, and in 2007 when the
construction of all of the major casinos was completed (Judiciary Police of the Macao SAR
Government, 2010). Specifically, gambling-related crimes grew by 37.8%, from 1,092 in 2005
to 1,506 in 2008 (Judiciary Police of the Macao SAR Government, 2010) (Table 3).
Table 3
Crime Rate and Crimes Related to Gambling
Year
# of
crime
cases
%
Increase
Crimes
related to
gambling
%
Increase
2000
8,925
-
-
-
2001
8,905
-0.2
-
-
2002
9,088
2.1
-
-
2003
9,920
9.2
-
-
2004
9,786
-1.4
-
-
2005
10,538
7.7
1,093
-
2006
10,855
3.0
979
-10.4
2007
12,921
19.0
1,279
30.64
2008
13,864
7.3
1,506
17.75
Crime rates and gambling related crimes in Macau
(Judiciary Police of the Macao SAR Government, 2010)
Although the total amount of crime has increased since 2002, Lo (2005) concluded that
there was a decrease in organized crime in Macau following the end of the gaming monopoly.
Similarly, Vong (2004) found that market pressure had forced local casino companies to improve
their administration processes to reduce the infiltration of organized crime groups.
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Traffic
The increase in tourism volume in Macau has led to an increase in transportation issues
and traffic related problems. A study done by the Inter-University Institute of Macau (IIUM,
2007) found that transportation problems were the issues causing the greatest frustration among
locals. DSEC (2009b) also found that the number of licensed automotive vehicles grew from
122,345 in 2002 to 182,765 in 2008, with the highest growth rates occurring between 2004 and
2007. This coincided with the opening of large casino resorts such as the Sands, Wynn, and
Venetian. Total traffic volume also grew significantly, with growth rates of 17.2% in 2004 and
15.4% in 2007 (DSEC, 2009b) (Table 4). A report by the Transport Bureau (2010) concluded
that between 1999 and 2009 road construction only increased by 27.3%, while tourist and vehicle
totals increased by 202.3% and 65.2%, respectively.
Table 4
Vehicle Transportation
Licensed Vehicles
Traffic Accidents
Vehicle Traffic
Year
#
%
Increase
#
% Increase
#
%
Increase
2000
113,231
-
8,278
-
2,052,528
-
2001
114,765
1.35
9,854
19.04
2,238,356
9.05
2002
122,345
6.60
10,523
6.79
2,445,579
9.26
2003
130,472
6.64
11,764
11.79
2,413,170
-1.33
2004
141,258
8.27
12,758
8.45
2,828,346
17.2
2005
152,542
7.99
13,318
4.39
3,101,421
9.65
2006
162,874
6.77
12,963
-2.67
3,300,312
6.41
2007
17,452
7.15
12,974
0.08
3,807,517
15.37
2008
182,765
4.72
12,834
-1.08
3,785,863
-0.57
Vehicle Transportation Data (DSEC, 2009b)
Infrastructure
The development of casinos has accelerated the construction of many regional projects
that aim to improve the infrastructure of the city. In 2006, the proposal to construct the Light
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Rail Transit (“LRT”) was passed, after more than 10 years of debate on the issue
(SkyScraperCity, 2012). The LRT is intended to create a more efficient transportation option
between the Macau Peninsula, Taipa Island, and Cotai. This will help increase the number of
visitors from the border gates and ferry ports to the casino resorts on the Cotai Strip, and reduce
traffic congestion on roads and bridges.
The creation of the Hong Kong–Zhuhai–Macau Bridge was also approved in 2008, and
construction officially began in 2009 (Arup Group Limited, 2010). The project is expected to be
completed in late 2016, and is considered a solution for shortening the travel time between Hong
Kong, Macau, and Zhuhai. The bridge is projected to have an immediate impact to these regions
to facilitate tourist traffic between the cities (Hsu & Zheng, 201.0). It will make Macau more
accessible for international visitors from Hong Kong's international airport.
Entertainment & Recreation
The introduction of new casinos has resulted in more leisure and recreation options
throughout region. Table 5 shows that not only did the number of casinos jump from 24 in 2006
to 31 in 2008, but the total number of restaurants, bars, saunas, massage parlors, and karaoke
venues also increased from 460 to 537 during the same period (Macau Government Tourist
Office, 2010). According to Suntikul (2008), the total number of shows and exhibitions in
Macau increased from 8,71.3 in 199.8 to 13,491 in 2008. In addition, sports facilities and
recreational complexes grew from 284 to 720 during that same time span. New casino resorts
also brought new retail options to the local community. The total number of retail lots grew
from 301,389 square feet in 2006 to 4,197,925 square feet in 2009 (Wan & Pinheiro, 2009).
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Table 5
Number of Entertainment and Recreation Facilities
2006
2007
2008
Casino
24
28
31
Travel Agency
122
129
132
Restaurants
240
272
281
Bars
112
135
145
Sauna & Massage
50
46
45
Karaoke
58
56
66
Total
606
666
700
Total number of entertainment and recreation facilities
(MGTO, 2010)
Life Quality
In 2010, Macau was rated as the seventh best place to live in Asia, according to the ECA
International's survey (ECA, 2010). The survey was based on numerous categories including
climate, air quality, health programs, housing, social network, recreational facilities,
infrastructure, personal safety, and political tension. However, casino development may have
caused an increase in traffic volume, which has decreased the air quality throughout the region.
A study by the Macao Meteorological and Geophysical Bureau (2008) concluded that there has
been a decline in Macau’s air quality since 2000. The study also projected that Macau’s air
quality will continue to decrease, which will damage the quality of life for local residence and
negatively affect life expectancy of the population.
Home values have increased at a greater rate than average annual income since 2002,
which is primarily due to the expansive casino development in the region (Vigers International
Property Consultants, 2007). The average price for homes prior to 1989 was $2,242 per square
meter. After 2000, home prices more than doubled to $5,096 per square meter (Vigers
International Property Consultants, 2007). Although monthly incomes have increased for local
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residents, it is still difficult for them to buy property (Vigers International Property Consultants,
2007). There has also been a consistent increase in the inflation rate since 2004, from -2.6% in
2002 to 8.6% in 2008 (DSEC, 2008) (Table 6). The price of food, non-alcoholic beverages, and
clothing increased by 14.3%, 13.6%, and 9.3%, respectively, during this same time period
(DSEC, 2008).
Table 6
Inflation Rate 2003-2008
Year
Inflation rate (%)
2002
-2.6
2003
-1.6
2004
1.0
2005
4.4
2006
5.2
2007
5.6
2008
8.6
Inflation Rate in Macau (DSEC, 2008)
Summary
Although there is conflicting research regarding the economic and social impacts of
gaming, there is enough data to create reliable assumptions about the effects of casinos. The
research strongly suggests that casinos improve the overall economic landscape of host
communities. This is a result of new job creation in the local market, and the additional
consumption that results from the increase in labor. This was evident in the development of
Macau’s economy after the end of the gaming monopoly in 2002. Total GDP, per capita GDP,
and total employment all increased at an exceptionally high rate once casino development began.
Although a few local industries were negatively affected by the introduction of new casinos, the
overall impact on the regional economy was extremely positive.
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In contrast, many reports suggest that casinos have a negative impact on the social
wellbeing of the local community. These reports point to an increase in crime and a decrease in
life quality due to the hardships created by problem gambling. However, given the difficulty in
understanding the different variables that effect social measurements, most research lacks a
consistent methodology when evaluating social effects. This has resulted in conflicting research
on the different social impacts of casinos. Research regarding gaming development in Macau
also suggests that casinos have had negative social impacts to the region. However, Macau’s
situation is very unique due to the extensive increase in tourism traffic and large creation of
hospitality jobs. The following section will evaluate the effects that took place in Macau, and
explain why these outcomes may or may not be consistent with the overall literature on casino
gaming.
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PART THREE
Introduction
To evaluate the economic and social impacts that took place in Macau, it is necessary to
understand the unique circumstances that surround the region. Given the large economic
benefits created by the casino development, many Asian countries are seeking ways to replicate
this economic growth. The problem that many Asian countries face is trying to understand the
variables that made casino development in Macau so successful, and whether these variables are
comparable to other Asian markets. This section will analyze the effects that took place in
Macau, and compare these results to the general research on casino gaming.
Analysis of Macau’s Casino Development
Economic Impacts
A review of the data suggests that casino development was the primary source of
economic growth in Macau from 2002 to 2009. According to DSEC (2010a), GDP grew from
60,000 MOP in 2002 to 160,000 MOP in 2009. This is to be expected as much of the literature
regarding the effects of casinos suggest that a new casino acts as a stimulus to the local economy.
Studies by Cotti (2008) and Long (1996) found that casinos create direct and indirect jobs from
the labor required to run the casino and the supporting regional communities. However, this type
of economic increase is diminished if there are existing gaming options in the host community.
According to Rose (1998), the future growth potential for communities with existing gaming
options is less than communities introducing gaming for the first time. This was the case in
Macau as casinos had been operating in the city for many years. The reason why Macau was
able to experience such substantial economic increases was the large influx of visitation and the
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pent-up demand in China. According to DSEC (2010b) Macau’s visitation increased from
12,000,000 visitors in 2002 to 27,000,000 million in 2007.
Before 2003, Chinese tourists could only visit Macau and Hong Kong during business
trips or group tours. The creation of the IVS (Individual Visit Scheme) allowed Chinese
residence to visit Macau for leisure purposes, which increased Macau’s gaming market
exponentially (Legislative Council Secretariat, 2014). Since the creation of the IVS, mainland
visitors have accounted for more than 50% of total visitation to Macau (DSEC, 2010b). Due to
this influx of new customers and lack of casinos in the region, the diminishing economic benefit
of new casinos was nonexistent. This supports the study done by Eadington (1995) that states
that the more customers that come from outside the host community, the more gambling goods
and services will be “exported”, which will result in economic benefits to the region.
It is important to note that many Asian countries that are introducing gaming into their
local economies may not experience the type of economic growth that took place in Macau, due
to Macau’s pent-up gaming demand and the lack of gaming supply before 2002. Although the
events in Macau support the theory that casinos induce economic growth, the unique
circumstances of the region created the ideal environment for casino gaming. This type of
“perfect storm” allowed casino operators to generate abnormally high levels of gaming revenue.
Although the addition of new casinos in other Asian countries will have some benefit to local
communities, the lack of pent-up demand will limit the amount of gaming revenue that is
generated by these casinos.
As the gaming industry starts to mature, operators are focusing more on strategic
locations rather than the number of locations. Gaming revenue is highly dependent on the
number of gaming options in a targeted region, and the overall demand of gambling related
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activities (Gu & Tam, 2014). This is why countries such as Japan are highly desired by gaming
operators around the world. The country has many characteristics of Macau, because the
population has a high demand for gaming activities, but the government currently limits the type
of gaming establishments that can be built (Aruvians, 2013). Without this pent-up demand most
other Asian countries will realize that the “build it and they will come” philosophy will not
produce the desired results.
Social Impacts
As mentioned in the literature review much of the research on the social effects of
gaming lack a consistent methodology for measuring social costs. The research regarding the
casino development in Macau is no exception. Although most of the data on Macau support the
general research that the social environment is negatively affected by new casinos, most of the
studies do not factor in all the necessary variables. Many of these studies fail to address the
increase in population and how the influx in tourism affected Macau’s social environment.
One negative outcome of Macau’s casino development was the increase in school
dropouts, however it is important not to confuse correlation with causation. Research by the
Education and Youth Affairs Bureau (2010) found that total school dropouts increased from
1,996 in 2002 to 2,388 in 2007. This supports the study by Long (1996) who found the gaming
communities had higher amounts of social issues such as child protection services, lower
educational attainment, and marriage counseling then nongaming communities. It is evident by
the data that the number of school dropouts increased from 2002, but the data does not make a
direct connection to casino gaming. Due to the large increase in Macau’s population, it is to be
expected that the number of dropouts would increase. In addition, the development of casinos
has increased the number of tourism sector jobs in Macau (DSEC, 2010d). This supports the
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findings of Cotti (2008) who found that counties with casinos experience an increase in
employment after a casino opens. It also supports the study by Long (1996) who found that
casinos create direct jobs that are created from the actual gaming operations. These jobs require
a low level of education, and many students are choosing these jobs over finishing school
(Education and Youth Affairs Bureau, 2009). Although not ideal, this may show that students
are dropping out to take advantage of job opportunities, rather than choosing gambling activities
over school. This can be anticipated in other Asian countries in which new casinos are expected
to substantially increase total population.
The connection between crime and casinos is another issue that has resulted in mixed
findings in both Macau and other gaming jurisdictions. Similar to the research done on school
dropouts, studies connecting crime to Macau’s casino development do not take into account the
large increase in tourism volume and population. These finding support the research by Grinols
and Mustard (2006),!Evans and Topoleski (2002), and Stokowski (1996) that suggest that
communities with casinos have more crime than communities without casinos. However, all of
these studies fail to account for the increase in visitor volume in their targeted regions. Studies
by Reece (2010) and Janes and Collison (2004), which do account for the increase tourism
volume, suggest that casinos are not directly connected to an increase in crime. These studies
argue that an increase in tourism volume will naturally result in an increase in total crime due to
the simple fact of more people in the region. This theory is supported when comparing the
increase in Macau’s total visitation starting in 2002 (DSEC, 2010b), with the corresponding
increase in total crime (Judiciary Police of the Macao SAR Government, 2010). Asian countries
that are entertaining the idea of new casinos, must anticipate an increase in total crime if tourism
volume is projected to increase.
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Data regarding problem gambling in Macau suggests that there has been an increase in
the number problem gamblers since 2003. According to the Institute for the Study of
Commercial Gaming at the University of Macau (ISCG, 2009), the total number of problem
gamblers in Macau grew from 4.3% in 2003 to 6.1% in 2007. Chan (2011) found similar results
and concluded that the number of problem gamblers in Macau was directly linked to the number
gaming options in the region. However, these studies do not take into account that pathological
gamblers may partake in other pathological actives. Studies such as Braunlich, (1996) and
Room, Turner, and Ialomiteanu (1999), suggest that there is no significant evidence that proves
that casinos create problem gambling. The two studies argue that individuals who are
pathological gamblers will participate in some form of pathological activity regardless of if
gaming is locally available. An increase in pathological gamblers should be expected if an Asian
country introduces gaming to the local community, however it should not be assumed that the
gaming itself created pathological individuals.
Although the majority of research suggests that casino development decreased the social
environment in Macau, studies also suggest that casino development increased the development
of many regional projects. In 2006, the Light Rail Transit (“LRT”) was passed to create a more
efficient transportation option between the Macau Peninsula, Taipa Island, and Cotai
(SkyScraperCity, 2012). The creation of the Hong Kong–Zhuhai–Macau Bridge was also
approved in 2008, and is a solution for shortening the travel time between Hong Kong, Macau,
and Zhuhai (Arup Group Limited, 2010). These projects support the study by Nicholas (1998)
who found that casinos result in an improvement of tourist and convention facilities, as well as
increased infrastructure and tourism capacity. Asian countries must account for the necessary
resources for improving the local infrastructure to accommodate the increase in tourism volume.
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Conclusion
Although there are many studies on the social and economic effects that took place in
Macau, the most accurate of these studies center on the economic impacts to the region. Key
economic indicators such as GDP, per capita GDP, and employment demonstrate the type of
economic stimulus that casino development brought to the region. In addition, the increase in
gaming tax revenue generated from the new casinos has resulted in cash allowances for Macau’s
citizens, which has increased the average household income of local residence. Unfortunately,
the research regarding the social effects does not result in a clear answer. Many of the studies do
not take into account the influx of visitation to the region, and neglect how this may affect issues
such as crime, education, and overall quality of life.
Asian countries who are introducing gaming to their local communities must understand
two important concepts. First, the substantial economic benefits that were experienced in Macau
are unlikely to occur in most jurisdictions, due to the lack of pent-up demand that Macau had
readily available. In addition, the creation of the IVS allowed mainland Chinese citizens to visit
Macau for leisure purposes, which substantially increased the size of Macau’s gaming market.
The second concept deals with the uncertainty in predicting the social effects that will take place
once gaming is introduced. If new casinos are expected to increase tourism volume to the
country, then it would be safe to assume that the county would experience an increase in total
crime as well as an increase in traffic volume. However, given the lack of comprehensive
research connecting casinos to low education levels, it would not be expected that educational
attainment would drop once casinos are introduced.
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Recommendations
There are many recommendations that can be made to improve the accuracy of the
conclusions drawn from this study. The most important recommendation would be to improve
the accuracy of the research regarding the social effects of gaming. This would involve creating
a consistent methodology for all studies, which would improve the validity and comparability of
the findings. This can also be accomplished for the economic research as well, specifically for
analyzing how local industries are affected by new casinos. It is also important to note that the
analysis of this report focuses on Macau’s gaming environment from 2002 to 2009. Given that
there were casinos prior to 2002 (although limited), it would be beneficial to evaluate research on
Macau that dates prior to 2002. This would be used to compare how the market was affected by
the limited casinos in comparison to the large casino development starting 2002.
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