How Chinese Crackdown on Macau is hurting Vegas

Macau and Las Vegas are separated by 7,300 miles, so, geographically, it seems very unlikely that Macau’s declining revenues would hurt Sin City. However, the truth is that the world’s two biggest casino gaming destinations are very interconnected, and Vegas is beginning to feel the sting of a recent crackdown on Macau.

Chinese President Xi Jinping has stepped up efforts to end political corruption and money laundering – both goals that have directly affected Macau. Going further, Xi’s campaign really takes aim at casino gambling.

First off, travel visas are regulated for anybody traveling to noted casino destinations like Macau, Vegas and Singapore. It’s also illegal for casinos to anywhere on the mainland in any form, including text ads sent to mainlanders’ cell phones by the Las Vegas Convention and Visitors Authority.

The end result of the lack of ads and visa regulations means that Vegas can expect their significant number of Chinese visitors to decline in future months/years. 2012 saw a rush of 263,000 Chinese tourists descend on Sin City, up 39 percent from the previous year. But as Fool.com notes, that figure is likely to fall in 2015 and casinos are already cutting back on expenses since baccarat – a Chinese favorite – should experience a decline.

One more problem besides the lack of tourism is simply the fact that many of the same companies that have thrived in Macau, Las Vegas Sands, MGM Resorts and Wynn Resorts, are also among the biggest companies in Vegas. So if they continue to see stock prices fall amid Xi’s anti-corruption campaign, they will also have to continue cutting back.

So is there anything to look forward to moving forward with Xi’s vendetta against gaming? Fool.com notes that the Chinese President has urged the Macau government to continue diversifying their offerings to include more dining, shows and shopping, which shows that he isn’t completely against the area. Assuming Macau can use diversification to turn things around and become a more-family friendly destination, then the major casino corporations there will begin experiencing growth again. In turn, this should encourage more visitors to Vegas as global casino giants make more money and continue thriving. But in the meantime, it looks like both Macau and Vegas will be going through some growing pains.