– This is the script of CNBC's news report for China's CCTV on October 27, Tuesday.
Welcome to CNBC Business Daily, I'm Qian Chen.
There was a time when a seemingly endless wave of money from wealthy mainland Chinese gamblers was flooding into the former Portuguese colony, turning it into the world's biggest gambling market.
Now, the special Chinese region finds the odds have quickly turned against it.
Mainland Chinese high rollers rise are staying away amid a persistent economic slowdown and President Xi Jinping's continuing crackdown on corruption, both of which are crimping lavish spending.
The downturn has cut into profits at U.S. casino operators such as Las Vegas Sands Corp. and Wynn Resorts Ltd., which have multibillion-dollar projects in the pipeline.
Macau's casino revenue plunged in September, dropping for a 16th straight month, hurt by a reduction in junkets and seasonal weakness ahead of the weeklong Chinese National Day break.
Gross gaming revenue decreased 33 per cent to 17.1 billion patacas (S$3.07 billion), narrowing from August's 35.5 per cent drop, data from Macau's Gaming Inspection and Coordination Bureau showed. The latest decline was in line with the estimates from nine analysts surveyed by Bloomberg.
"What we're seeing right now is the continuing weakness of the VIP sector,"
Grant Govertsen, an analyst at Union Gaming Group, said by phone ahead of the data release. "The mass market is holding up much better."
Now, this China's world-beating gambling hub is getting a taste of Hollywood glamor as its newest casino resort makes its debut on Tuesday with a glitzy grand opening that masks turmoil behind the scenes.
Pop diva Mariah Carey, film stars Leonardo DiCaprio and Robert De Niro and director Martin Scorsese are among the celebrities enlisted to help launch Melco Crown Entertainment Ltd.'s $3.2 billion Studio City project in Macau.
The movie-themed resort features a Batman flight simulator ride, a figure-8 Ferris wheel and Art Deco architecture evoking Hollywood's early days.
It's part of a wave of big-budget projects opening over the next two years.
Melco Crown CEO LAWRENCE HO told CNBC during an interview that he believes this new property is built to last.
[LAWRENCE HO, CEO, Melco Crown ]"093345 When we opened city of dreams, that was in June, 2009. That was kinda the end of the global financial crisis. So I think a lot of our industry people are hoping that, with the studio city opening is the end of the downfall of the Macau market. 093401 You know, I think ultimately we build these properties for the next 10, 20 years. 093406 "
Macau, an hour by ferry from Hong Kong, is the only place in China where casinos are legal. It has about three dozen casinos that rake in about seven times more revenue than the Las Vegas Strip.
some experts told us that besides the political concerns, wealthy mainland Chinese high rollers feel they've been to Macau "too many times" and are now eyeing other emerging Asian gambling destinations such as Vietnam, Cambodia, the Philippines, South Korea and Vladivostok in Russia's Far East.
Junkets, the often shadowy middlemen who have helped fuel Macau's spectacular casino growth by acting as an informal banking channel, are feeling the pain. The companies lend gamblers money in VIP rooms and collect debts when they return home, allowing high-rollers to get around restrictions on how much money can be taken outside mainland China.
But the system is collapsing as Beijing tightens up on money laundering and capital flight. One junket operator, Neptune Group Ltd., which reported an annual loss of more than $100 million, said it was thinking of closing more VIP rooms and moving into money lending or other businesses because of the prospect of increased scrutiny.
Therefore, NO VIP is the new core strategy for Studio City, which targets the mass tourists.
Macau's upcoming resorts will emphasize entertainment and shopping over gambling as casino operators bow to authorities' desire to shed the city's image as a sleazy, vice-ridden gambling haven to become a family friendly global tourist destination.
Lawrence said Macau's next goal... is to become Vegas' Strip area.
[LAWRENCE HO, CEO, Melco Crown ] "094028 on one hand, there's intense competition within Macau, but on the other hand, there's a bit what happened in Las Vegas going on where the business is being drune to Cotai. All the resources that you just talked about are happening in Cotai. I think more and more of the business, I think similar to Las Vegas, will go to the strip, rather than downtown Las Vegas"
China's economy "will no longer be the same dominant force to keep high roller clients in abundant supply" for Macau's casinos, the company said in its annual report.
Adding to the industry's troubles, another junket company, Dore Entertainment, reported to police last month that an employee allegedly defrauded at least $12.9 million from investors, who have held daily protests.
Casino floors have been noticeably quieter this year in Macau, where gambling revenues have fallen for an unprecedented 16 months straight.
[GRANT GOVERTSEN Union Gaming Group Managing Director] "114141 Ultimately, the mass market story in Macau is the most viable clue that's the one being ordained by Bejing as the future of Macau. Studio city where it benefits, number one is it's designed for that mass mkt consumers more than anything else. Clearly they arent going after VIPs. So thats positive for the long term basic. And the infrastructure is another point .when 2 years from now. The rail guangzhou down to the hanching-guotai border gate. Studio city will be the first stop once you get to Macau."
CNBC's Qian Chen, reporting from Singapore.