HONG KONG—Beijing's intensifying crackdown on corruption is hitting two of the playgrounds of China's elite: the VIP rooms at Macau casinos and luxury shopping malls in Hong Kong.

Casino revenue in the world's gambling capital fell for a second-straight month in July, dropping 3.6% from a year earlier as high-rollers from mainland China stayed away from the tables in Macau. In Hong Kong, sales of jewelry, watches and other luxury items dropped 28% in June, marking a fifth-straight monthly decline.

The retreat in Macau has been driven by the same VIP gamblers that powered the city's rise to the top in recent years. Revenue from these gamblers, typically rich Chinese who are brought to Macau by middlemen known as junkets, fell by between 14% and 18% in July, according to analysts at UBS. By contrast, in 2010 VIP revenue grew by 70%.

Across the Pearl River Delta in Hong Kong, the wealthy mainlanders who have packed the city's high-end stores have also been holding back. Sales of luxury goods fell by nearly a third in the second quarter, including a 40% plunge in April.

Analysts and industry executives said the Chinese government's fight against corruption is hitting both industries hard. With Beijing keeping a closer eye on conspicuous consumption and capital flight, being seen buying ten diamond-encrusted watches or throwing millions at a baccarat game is not recommended.

Though the anticorruption campaign began in 2012, President Xi Jinping raised the stakes significantly in the past week with the announcement of an official investigation into Zhou Yongkang, the country's former domestic security chief and one of the nation's top nine leaders until he retired in 2012.

"This anticorruption crackdown in China is much more widespread and deeper than the VIP community had anticipated and as a result there could be prolonged weakness in the market," said Union Gaming Research analyst Grant Govertsen.

The last time Macau recorded revenue declines was in 2009 during the global financial crisis, but that was just a blip in Macau's stunning growth. The former Portuguese territory generated $45 billion in gambling revenue last year, or seven times that of the Las Vegas Strip. VIPs who came primarily through junkets accounted for nearly two-thirds of that revenue.

"The ongoing anticorruption campaign is placing considerable focus on the illicit transfer of Chinese funds overseas. Macau is a significant factor in this," said Steve Vickers, a consultant who has investigated junkets and formerly led the Royal Hong Kong Police Criminal Intelligence Bureau.

Previously junkets had been most visibly affected by the campaign in late 2012 when Chinese police detained backers of one of Macau's then-largest junkets on suspicions they had ties to Bo Xi Lai, a prominent politician jailed in the crackdown. The crackdown has increased with Mr. Xi's rise.

"All of a sudden the world is changing," said one top casino executive who deals with junkets. "The central government is much more concerned about junkets getting out of line." The situation is worrying both junket operators and their VIP customers, who "don't want to be involved with people who could get them in trouble," the person said.

Macau, the only place in China where casino gambling is legal, has long relied on junkets to bring in high-spending gamblers from the mainland, issue them credit and collect players' debts in exchange for commissions from casinos. The system took root because Beijing limits how much money Chinese can take out of the mainland and doesn't consider gambling debts valid there.

The poor performance in Macau's VIP market has smacked casinos. The Macau units of Las Vegas Sands Corp. LVS -1.53% Las Vegas Sands Corp. U.S.: NYSE ^$72.72 -1.13 -1.53% Aug. 1, 2014 4:00 pm Volume (Delayed 15m) : 3.78M AFTER HOURS ^$72.85 +0.13 +0.18% Aug. 1, 2014 7:50 pm Volume (Delayed 15m) : 56,389 P/E Ratio 22.38 Market Cap $59.66 Billion Dividend Yield 2.75% Rev. per Employee $306,370 08/01/14 Wary High-Rollers Shy Away Fro... 07/31/14 Consuelo Vanderbilt Balsan's H... 07/30/14 When in Doubt, Blame It on the... More quote details and news » LVS in Your Value Your Change Short position and Wynn Resorts Ltd. WYNN -1.48% Wynn Resorts Ltd. U.S.: Nasdaq ^$210.04 -3.16 -1.48% Aug. 1, 2014 4:00 pm Volume (Delayed 15m) : 1.67M AFTER HOURS ^$209.08 -0.96 -0.46% Aug. 1, 2014 7:40 pm Volume (Delayed 15m) : 22,776 P/E Ratio 25.61 Market Cap $21.59 Billion Dividend Yield 2.38% Rev. per Employee $353,678 08/01/14 Wary High-Rollers Shy Away Fro... 07/29/14 Stocks to Watch: Merck, UPS, P... 07/29/14 Wynn Resorts Profit Jumps as M... More quote details and news » WYNN in Your Value Your Change Short position both posted earnings last month that missed already-lowered analyst projections. The territory's four other gambling operators, including a unit of MGM Resorts International, are likely to also post weak earnings, according to analyst forecasts.

Casino companies' share prices are all in the red for the year, with worst-performer SJM Holdings Ltd. 0880.HK -1.44% SJM Holdings Ltd. Hong Kong ^$20.60 -0.30 -1.44% Aug. 1, 2014 4:01 pm Volume (Delayed 15m) : 8.33M P/E Ratio 14.99 Market Cap $118.20 Billion Dividend Yield 4.85% Rev. per Employee $2,533,910 08/01/14 Wary High-Rollers Shy Away Fro... More quote details and news » 0880.HK in Your Value Your Change Short position losing 21% compared to a 5.3% rise in Hong Kong's benchmark index. In recent years, casino stocks were among the best performers in the world. The share prices of Nasdaq-listed Melco Crown Entertainment Ltd. MPEL -2.56% Melco Crown Entertainment Ltd. ADS U.S.: Nasdaq ^$32.35 -0.85 -2.56% Aug. 1, 2014 4:00 pm Volume (Delayed 15m) : 4.05M AFTER HOURS ^$32.35 0.00 % Aug. 1, 2014 6:05 pm Volume (Delayed 15m) : 223,914 P/E Ratio 21.43 Market Cap $18.80 Billion Dividend Yield 1.60% Rev. per Employee $447,045 08/01/14 Wary High-Rollers Shy Away Fro... More quote details and news » MPEL in Your Value Your Change Short position as well as Hong Kong-listed MGM China Holdings Ltd. 2282.HK -2.10% MGM China Holdings Ltd. Hong Kong ^$28.00 -0.60 -2.10% Aug. 1, 2014 4:01 pm Volume (Delayed 15m) : 3.46M P/E Ratio 20.01 Market Cap $108.68 Billion Dividend Yield 1.86% Rev. per Employee $4,244,060 08/01/14 Wary High-Rollers Shy Away Fro... More quote details and news » 2282.HK in Your Value Your Change Short position and Galaxy Entertainment Group Ltd. 0027.HK -2.35% Galaxy Entertainment Group Ltd. Hong Kong ^$64.40 -1.55 -2.35% Aug. 1, 2014 4:01 pm Volume (Delayed 15m) : 11.64M P/E Ratio 27.42 Market Cap $279.78 Billion Dividend Yield N/A Rev. per Employee $4,127,030 08/01/14 Wary High-Rollers Shy Away Fro... More quote details and news » 0027.HK in Your Value Your Change Short position all more than doubled last year.

But casino executives say their futures remain bright as lower-end gamblers from China continue to flood their properties. Since 2010, gambling revenue from Macau's mass market has been rising by about a third each year.

Mass-market players are about four times more profitable than VIP players for casinos, which must split the high-roller spoils with the junkets. Even though mass market accounts for 37% of total Macau gambling revenue, it generates 70% of operating profit, according to Las Vegas Sands' second-quarter earnings presentation.

To capitalize, casinos have been shifting resources toward the mass market. Sands, for example, said it cut the number of its VIP tables in Macau by 28% to an average of 377 tables for the quarter ended June 30 and reallocated them to mass-market players.

In Hong Kong, China's corruption crackdown is hitting those wealthy mainlanders who prefer shopping sprees to gambling. Business and government travelers from China have typically been the "big spenders" here, said Kevin Lai, an analyst at Daiwa Capital Markets. He said in earlier times they would easily spend hundreds of thousands of Hong Kong dollars on fine dining and half a million on luxury items during a single trip. But now they're gone. "They got arrested or they're hiding or they just vanished," he said.

On Wynn Resorts' second-quarter earnings call on Tuesday, Chief Executive Steve Wynn noted luxury watch sales are also down in his Macau casino. A top Macau executive from a popular Western luxury brands said the company is seeing the same trends as casinos: faster growth among non-VIP customers.

—Gregor Stuart Hunter and Jacky Wong contributed to this article.

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