Sex could keep Macau from growing

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Macau has a sex problem. While many would not expect sex to ever be an issue, it is in the case of the gambling capital. As the city is hoping sex-could-keep-macau-from-growing-min (1)to undergo a transition from being seen as nothing more than a casino hub to a destination for all types of travelers, including families, Macau will need to figure out how to curb prostitution or those plans will never fully get off the ground.

The South China Morning Post (SCMP) took a look inside Macau’s operations and uncovered several disturbing elements that could potentially dampen the city’s large tourism initiative. Prostitution isn’t illegal in Macau, provided the ladies of the night are working as freelance entrepreneurs. As soon as prostitution becomes an organized racket or a profit-making scheme, it’s against the law. The fine can be as many as eight years behind bars.

That’s exactly what SCMP found – a number of prostitution rackets that are operating directly from properties controlled by major casinos. The media outlet conducted an investigation of “publicly available company ownership documents and interviews with law enforcement and gaming industry sources and site visits to eight of the hundreds of nightclubs across the city.” They found that prostitution rings are virtually everywhere, despite a crackdown that began three years ago.

Two nightclubs at Galaxy Casino properties were found to have organized rings with some clients being charged as much as $867. Two other nightclubs, owned and operated by Emperor Entertainment Group, were also found to have similar situations. When SCMP contacted both companies, they expressed their surprise over the prostitution and placed the blame squarely on the entities managing the clubs on their property. Neither indicated what action would be taken to correct the problem.

It’s not likely that the prostitution issue is one of the causes of the decline in gross gaming revenue (GGR) in the city this year, but that decrease shows the importance of offering a more diverse tourism industry. The latest figures, provided by JP Morgan Securities (Asia-Pacific) Ltd., show that GGR in Macau will contract by around 8% in the last quarter of the year compared to the same period last year.

The brokerage expects GGR to “get worse before it gets better” and adds that the first quarter could see declines, as well. Sanford C Bernstein analysts have made similar comments over the past couple of months and the only way to counter the drop in city revenue is to offer more options that can attract greater numbers of tourists willing to spend money. As long as prostitution stays prominent, though, reaching that objective is going to be extremely difficult.