After over a decade of staggering growth, Macau’s gambling revenues have starting to decline. What once seemed like a never-ending hot streak for the Chinese enclave, which in the mid-2000s overtook Las Vegas as the top international gambling hub, has cooled considerably. Revenue fell by 37% in March 2015, as compared with the same month in 2014, which marked the twelfth consecutive month of decline, as well as the fourth straight month with declines above 30%. While optimism still persists – several major casino projects are underway and projected to open later this year and into 2016 – the numbers suggest that the years of unfettered growth in Macau’s gambling market are a thing of the past.

As recently as February 2014, gambling revenue in Macau was up 40%. Just a year later, in February 2015, monthly revenue dropped a record-setting 49%. There are several factors to account for this precipitous fall. Some analysts wonder if Macau isn’t simply finding an equilibrium. Growth at the rate Macau’s gambling industry has grown isn’t sustainable, and a slow-down was inevitable. Gambling in Macau used to grow by the size of Las Vegas every year. Something was bound to give. For this reason, the Chinese government has been for some time pushing Macau to diversify its tourism offerings, to provide alternatives to gambling. Examples of this include shopping centers, a Batman virtual-reality ride, and a replica Eiffel tower. Yet, the big money remains in gambling, and the industry has more problems than profits naturally regressing to the mean.

The first of these problems is a decline in revenue from VIP patrons. In May 2014, following a crackdown by the Chinese government on corruption, VIP business started to heavily decline. The money that had previously financed extravagant gambling trips was no longer to be had. The junket system began to fall apart, as well. Junkets lured VIP clients to Macau’s various casinos and loaned money to the big-spenders, which would be repaid later, on the Chinese mainland. However, because of the corruption crackdown, as well as overaggressive lending, the junket system collapsed. The enormous amount of money poured into Macau from this system dried up.

Macau’s problems are not limited to its highest-rolling clientele. In October of 2014, mass market gambling began to fall, as well. Again, stricter regulations were to blame, as well as falling attendance numbers. The Chinese government tightened visa restrictions for mainlanders, making the trip more difficult. At the same time, there was increased oversight of UnionPay debit cards, one of the most popular ways for mainlanders to access money on Macau. Finally, the government implemented new smoking regulations. Mirroring regulations being made across the mainland, smoking has been increasingly monitored and disallowed, especially indoors, whereas previously there had been indoor smoking lounges on the casino-floors.

The mass market gambling has also been hurt by Macau’s decadent perception. As revenue soared, so did prices. Hotel rooms regularly cost upwards of $350 per night, and gambling tables often had minimum bets as high as $130. Potential gamblers were being priced out of the market, but rising VIP profits made the problem insignificant. Now, as VIP revenue crashes, and casinos increasingly look to the mass market to make up the difference, many mass market gamblers find the prices prohibitive. Even as those prices fall, the perception remains, and key business remains scared away. Slow downs in the general Chinese economy have not helped, either, as the burgeoning Chinese middle class that helped drive Macau past Las Vegas find themselves without the disposable income they once had.

This drop in lower-budget gamblers is especially worrisome, because much of the new development scheduled in Macau focuses on this mass market group. All six of the major casino operators in Macau – Galaxy Entertainment Group, MGM, Las Vegas Sands Corp, Wynn Resorts Ltd., SJM Holdings Ltd., and Melco Crown Entertainment Ltd. – are planning major new projects. The 1600 room Macau Studio City Hotel-Casino, operated by Melco Crown, opens in October. A new $2.7 billion Parisian resort operated by Las Vegas Sands Ltd. is expected to open within the year. The $4.1 billion Wynn Palace will open its baccarat tables in March 2016. The MGM Cotai will arrive sometime late next year, with the price tag of just under three billion dollars. Each of the projects presents huge risk along with potential reward. As overall gambling revenue in Macau falls, its operators suffer. MGM revenue fell by 11% in the first quarter of 2015, and MGM China fell by a third. Wynn Macau’s first quarter revenue was down 38%. Las Vegas Sands Ltd., which has the highest exposure in Macau, with 65% of its total revenue coming from its operations there, had its overall net income fall by 54% in 2015’s first fourth. All these companies are placing a large bet that Macau’s gambling industry will make a turn around.

The future of gambling in Macau is uncertain. 2014 was the first annual decline in revenue – down 2.6%, from a record setting $45.2 billion in 2013 – since data has been released publicly, in 2002. Analysts predict that 2015 revenue will fall to around thirty or thirty-five billion. With nearly three dozen casinos, and more on the way, Macau is, as the poker players say, pot-committed at this point to the gambling industry. Time will tell whether the industry stabilizes, or continues to decline.