Macao

Macao is China's designated exception—the only place in the People's Republic where gambling is legal, generating more casino revenue than Las Vegas and Atlantic City combined.

Portuguese sailors arrived at the Pearl River Delta in the 1550s seeking trade with Ming China. According to one account, they rid the bay of pirates and, in gratitude, local authorities permitted them to establish a trading post in 1557. The name itself came from A-Má Gao—the Bay of A-Má, after a local goddess temple—morphing through Amacao to Macao. For the next 300 years, Portugal paid annual rent to stay, operating under Chinese sovereignty while running the territory. It was never quite a colony, never quite independent—a liminal space that became comfortable with ambiguity. Macao was the first European foothold in China and would be the last to leave: the treaty granting perpetual colonial rights came only in 1887, and even then China's shadow never fully lifted.

The gambling concession that defined modern Macao emerged in 1962 when Hong Kong tycoon Stanley Ho won a 40-year monopoly on all forms of gaming. His Sociedade de Turismo e Diversões de Macau built casinos catering primarily to Hong Kong gamblers making the short ferry trip across the Pearl River. The real transformation came in 2002, two years after the handover to China. The new government ended Stanley Ho's monopoly and issued concessions to three operators—including Las Vegas Sands, which opened Sands Macao in 2004 and recouped its $265 million investment within twelve months. By 2007, Macao had surpassed Las Vegas in gaming revenue. The formula worked because the territory offered something unique: China's only legal gambling jurisdiction, positioned at the doorstep of the world's fastest-growing population of wealthy individuals.

Today Macao generates gaming revenue of $28.35 billion (2024)—more than triple Las Vegas's take and still only 77.5% of its 2019 peak before pandemic closures. About 80% of government tax revenue comes from casinos. The six concessionaires have committed nearly $15 billion to diversify into non-gaming amenities—entertainment, retail, convention facilities—but the fundamental model remains: Macao is China's pressure valve for gambling demand, permitted to exist precisely because gambling is prohibited everywhere else in the country. The 'one country, two systems' arrangement guarantees this autonomy until 2049, but what happens after that deadline has never been publicly stated. Unlike Hong Kong, Macao has proven cooperative; the 2019 protests that convulsed Hong Kong found little echo here.

With gaming revenue projected to reach $30-33 billion in 2025, Macao's economic recovery is near-complete. The 2026 question is how long China will permit this exception to exist—and whether, as 2049 approaches, the territory can diversify enough to survive the potential end of its gambling monopoly.