Macao's unique industries are tourism, gambling and the lottery, which are closely interdependent and of world-wide repute. They have become indispensable foundations of Macao's economy. The Macao-Portuguese government has formulated a series of laws to standardize tourism, gambling and lottery activities in a bid to promote their development. These laws involve administrative systems for hotels, the catering industry and travel agencies, as well as protection of tourism resources.

Gambling is the core of the recreational sector. The gambling and lottery industry are currently controlled by a monopoly system. The Macao government grants permission in the form of concession contracts to monopolize the industry. The concessionaire has to pay special taxes to the government, bear related obligations and accept supervision. The Gambling and Games of Fortune Supervision and Co-ordination Bureau is in charge of supervising gambling and games of fortune activities. The government has worked out regulations to ban other gambling. The Governor of Macao has decision-making power on gambling and games of fortune activities, including conditions for approval, extension, suspension and revoking of the contract, and punishment of concessionaires in violation of the contracts.

The law contains provisions on business venues, time and methods of recreational activities organized by night clubs, bathhouses and karaoke halls.

1.

Macao's gambling and lottery industry has a long history. Most Chinese living in Macao in the 16th century were construction workers, dockers and servants. With business being brisk, people from inland areas flooded into Macao. The Portuguese claimed to respect Chinese customs, including undesirable customs. They took a laissez-faire attitude towards Chinese gambling. Gambling rooms spread over streets and lanes. There were no rules and regulations on gambling activities at that time. Bankers in gambling became the first group of gambling business people.

Article 10 of the "Provisions on Dealing with Problems Arising from Incidents in Macao" signed in 1749 by Zhang Rulin, magistrate of Haifang and the highest administrative chief in Macao dispatched by the Qing Dynasty, said, "Harbouring bandits is forbidden and giving shelter to young ruffians for gambling and stealing is banned." This demonstrates that gambling affected public order in Macao so seriously that China's officials proscribed gambling by formal decree. The Macao local authorities issued an official notice in 1829 once more laying stress on the banning of gambling.

When Hong Kong opened its port to the outside world, Macao suffered a drastic decline in its gambling business. The Macao-Portuguese authorities announced the legalization of gambling in 1847 and began to rely upon gambling as its main economic pillar. The local government issued numerous gambling licenses to collect takings. "Alarmist Talk in a Flourishing Age" written by Zheng Guanying, stated that Macao had as many as 2,000 gamble houses and raised 100,000 patacas in gambling taxes annually. The situation was very confused due to varied gambling regulations and fighting among sects.

In 1896 when the Portuguese government announced a ban on gambling, the Macao-Portuguese authorities had to cancel the licensing system. However, gambling dealers continued to engage in the business in a new way by offering donations to the government. Thus did gambling flirt with the law for more than 60 years.

Gambling was rampant in Guangdong in the late Qing-Dynasty and the province was dubbed "the Kingdom of Gambling." Gambling was forbidden then permitted intermittently due to the changeable political situation. Macao profited from the gambling activities because of its super stable policy on gambling. The gambling industry was the product of the late Qing-Dynasty's decline and the only industry which is still retained today in Macao.

After 1911 when the Republic of China was founded, the Macao government resumed the concession system and practised exclusivity.

In 1930 Lou Kao set up Hou Heng Co. and won exclusive rights to carry on a gambling business at an annual tax of 800,000 patacas. However officials colluding with business people resulted in a competitive bidding system inflicted with great randomness and confusion.

Futakian, who became rich running gambling houses in Shenzhen, moved to Macao in 1937. Fu and Kou Ho Neng, king of the gambling industry in Hong Kong and Macao, jointly established Tai Heng Co. The company won the concession with a bid of 1.8 million patacas. The amount increased to 2.1 million patacas the following year. The company opened three gambling houses and practised a standardized system of management.

As Macao was in a special position of "neutrality" during the War of Resistance against Japan (1937-45), its population rose sharply from 120,000 to more than 400,000. With numerous rich people coming to Macao to flee the war, Macao's economy entered a lopsided period of prosperity. Prostitution, gambling, drug-addiction, and general pleasure-seeking promoted the development of various industries, especially gambling and the games of fortune industry. The bosses of Tai Heng Co. became wealthy tycoons.

After World War Two, revenues from gambling dropped to 1.2 million patacas in 1946 due to the exodus of people. However, before and after the founding of New China many people again flowed into Macao, resulting in a thriving gambling business and a leap in profits once more.

2.

Jaime Silverio Marques, the 119th governor of Macao who assumed office in 1959, had an important influence on the development of Macao's gambling industry. He held that Macao's tourist resources had big potential and that the "gambling and entertainment industry" would become a major growth factor of Macao's economy. Lisbon accepted Marques' suggestion and announced in February 1961 that Macao was a tourist region and that gambling was approved as a "special entertainment game." After the ban was lifted, Macao's gambling industry was legalized.

After making investigations, Marques decided to halt the illicit transfer of gambling concessions, cancelled original concession holders’ priority and put into practise the principle of the contract going to the highest bidder, based on fair system of bidding. As a result, the Turismo e Diversoes de Macao (Macao Tourism and Entertainment Co. Ltd.), jointly set up by Ip Hon, Herry Fok, Stanley Ho and Ip Tak Lei, defeated Futakian, "King of Gambling", and won the franchise to run the Chinese and Western gambling business. The company's annual taxes were 3.167 million patacas.

Macao has won the name of "Oriental Monte Carlo" due to successful management of the company. "Hong Kong and Macao Economy" reported profits earned by Turismo e Diversoes de Macao as nearly doubling that of the Hong Kong & Shanghai Bank in 1987. In a report to the United Nations, the Macao government praised the company for its brilliant performance and for occupying a decisive position in Macao. Since its establishment in 1962, the company extended the contract seven times and won the monopoly business contract for 40 years. With a workforce of 6,000 and 10 gambling houses, in the 1990s the company invested more than 150 billion Hong Kong dollars annually. It delivered 5.6 billion HK dollars in gambling taxes in 1997, comprising more than half of the government's tax revenues. Gambling, the "dragon head" of Macao's four pillar industries, has brought along the development of other industries, supported huge employment, promoted GDP growth and has been a driving force in the city's modernization. The company has earned several hundred billion patacas of profits with several million patacas of registered capital and tens of millions of patacas in start-up funds. With numerous tangible and intangible assets, the company, the largest beneficiary of Macao's modern economy, has all but dominated the city's overall economic lifelines. Practice proves that the gambling industry is Macao's greatest source of public finance.

"The casino results in both success and failure." In recent years, public order has become worse in Macao. The reasons are cited as being an incomplete legal system, not following the law and not enforcing the law strictly. The fringe interests of the casinos are huge commissions worth nearly 5 billion patacas. Part of that amount will become bribes and funds for illicit acts. The funds are used in ways to encourage crime, such as paralyzing the police force and upsetting judicial authorities. Troubles spread into society from the gambling circle, throwing society into a panic. Visitors and investors hesitate to come to Macao, the city's international image is damaged, economy has become more sluggish and the grand event of returning to the motherland is over-shadowed. Macao's interests have been hurt greatly.

The emergence of gambling districts in the peripheral areas has brought about fierce competitiveness in Macao. The competitiveness and attraction of the entertainment company have weakened due to their adherence to the old ways. The growth rate of the company's business declined to negative figures from an annual rate of 20 per cent for the past 30-odd years. The annual losses are nearly 40 per cent.

3.

Macao government has promulgated more than 20 laws governing tourism, games of fortune and gambling industries. They include:

Of the rules and regulations above mentioned, the 1982 Legal System on Gambling and Games of Fortune is a more integrated law on gambling and lottery and has far-reaching significance. According to this law, "gambling entertainment" has been officially changed into "Gambling and Games of Fortune" and "Macao will be a permanent gambling region". A concession (monopoly) system or a special license system is adopted. The contract has a minimum time limit of eight years and maximum time limit of 20 years. The number of special licenses will not exceed three. The gambling industry has practised monopoly business to this day.

Although Macao's laws on entertainment and gambling were revised and supplemented constantly, they have some shortcomings. The gambling contract for 1997 deleted 14 items, indicating great randomness. This is the inevitable outcome of long-term colonial rule.

4.

The historical return of Macao to the motherland will bring good opportunities to Macao. After the return, Macao’s gambling and lottery industry must follow the provisions of Article 118 of the Basic Law, which states, "Macao Special Administrative Region will formulate of its own the tourist and entertainment policy in accordance with overall local interests." Only if the above provision and principle are seriously implemented and practised to regulate gambling activities in accordance with law, can the declining tendency of the gambling industry be brought to an end, competitiveness increased and new contributions made to booming Macao's economy.

When drafting and checking tourist and entertainment policies, including taxation policy, the Special Administrative Region government should make all-round and profound investigations, hear public opinions and adopt a practical and realistic attitude towards controversial problems. It should analyse the gambling industry from both positive and negative viewpoints and make considerations about its role in the special administrative region's tax revenues and industrial mix, as well as take into account its negative influence on social ethics. Gambling can make Macao's economic structure lopsided, fragile and exposed as well as bring a series of social problems to Macao. From a long-term point of view, more efforts should be made to cultivate senior professional talent with a good knowledge of the gambling business. Social and economic acts should be standardized by law and social conflicts resolved in civilized ways. With a view to stability and economic development favourable to the whole situation, the legal system on the tourism and gambling industry should be improved and standardized, and the government's leading role in administration and overall strict supervision should be strengthened. Greater efforts should be made to avoid the emergence of grey areas in the important sectors. Clear-cut provisions should be formulated which deal with matters in accordance with law. Laws must be enforced strictly, erroneous ideas checked at the outset and quick response be made in order to prevent problems piling up.