MACAU (CNN) -- In the Jai Alai Show Palace, a stripper named "Judy" performs before a dozen customers in a nightclub that normally attracts hundreds. The manager says business is down by 50 per cent. The reason is fear of violence as rival gangs battle for control of the Portuguese colony's lucrative gambling and entertainment business. In fact, the 4,500 police in Macau -- a popular weekend getaway for residents of nearby Hong Kong -- are now outnumbered by gangsters, according to police. And it's not just strip joints where fear means fewer custo mers. Hotels, night clubs, massage parlors and Macau's many casinos also report that business is down.

Jump in violence

Macau, whose economy and very livelihood depends on its nightlife, has been rocked by a series of murders, bombings, stabbings and arson attacks in recent weeks. More than a dozen deaths and scores of beatings and injuries have been attributed to gang violence so far this year. That compares with 21 murders reported last year in the enclave of 445,000 people Afte r the latest wave of gangland warfare, heavily armed police fanned out across Macau last week in search of drive-by hitmen who gunned down three men in the heart of the city at midday. A senior police officer said the victims were "pretty well known triads" -- or members of Mafia-like Chinese criminal societies. The three were lieutenants of gang boss called Broken Tooth Koi, whose "14K" triads have been shooting it out with another group, the "Shiu Fong."

The motive? Money ...

The stakes are enormous. Fifty per cent of Macau's gross national product comes from gambling. The turf war erupted, fueled by a slowdown in Macau's economy that has cut the gangsters' profits. For years, the triads have thrived, in uneasy coexistence with the government, by running the loan sharking, smuggling and flesh trade surrounding the casinos. Now, that coexistence has been shattered. "The population is shocked," says Anabela Ritchie, president of the local legislature. Police sources estim ate the "14K" triad, boasting some 5,000 members, is on the wane despite outnumbering its rivals. Its arch-enemy, the "Shiu Fong" or "water room" triad, sometimes known as the Won On Lok, has about 3,000 members and its influence appears to be growing. The Hong Kong-based "Sun Yee On" triad also has a sizable presence in Macau, but its tentacles are believed to be restricted to specific gambling-related businesses. The Dai Huen, or "Big Circle," gang is said by police to be a "loose grouping" of criminals from China's southern Guangdong province which borders Macau.

Macau -- which is both the name of the colony and the main town on the Macau peninsula -- lies 25 miles from Hong, which reverts from British to Chinese rule on July 1. C hina is due to take control of Macau, a Portuguese outpost for more than 400 years, in 1999. Two years later, the franchise for all the casinos in town, currently held by Hong Kong tycoon Stanley Ho, will expire. The current bloodshed may also be the opening salvo as the triads jockey for position in Macau after the handover. 'No borders' makes catching criminal difficu lt Police have stepped up security to control the violence but the measures have so far proved ineffective, in part because many triads have been able to seek refuge with fellow criminals across the border in China.

"I think there aresome connections between the triads of Hong Kong, the mainland (China) and Macau," says Colonel Rui de Freitas of the Macau police. "There are no borders." Harold Bruning, a columnist for the Hong Kong Standard, agrees. "You commit a crime here, you walk across the border or you take a boat and in 10 minutes, nobody knows where you are," he told CNN. It's hardly a glorious legacy. But gun-toting gangsters and nightlife on the rocks are pushing other issues aside, as the end approaches for centuries of colonial rule in Macau.

(Reuters contributed to this report.)