Boom times for Macau’s casinos

Boom times for Macau’s casinos


Macau Casino Revenue May Double in Three Years, U.S. Group Says


By Kelvin Wong


June 4 (Bloomberg) — Macau, the only place in China where casinos are legal, may more than double its gaming revenue in three years, according to the results of a survey conducted by the American Gaming Association.


More than half the 23 analysts and casino executives surveyed by the group said Macau is likely to maintain its revenue growth for at least a further three years, Frank Fahrenkopf, the association’s president, said. Gaming revenue in the city grew 45 percent last year, according to government figures.


Foreign casino operators including Las Vegas Sands Corp. and Wynn Resorts Ltd. are investing more than $25 billion in the former Portuguese colony to cater for increasing numbers of affluent Chinese gamblers. Gaming revenue in Macau, which surpassed the Las Vegas Strip as the world’s biggest gambling hub in 2006, may grow 29 percent this year, according to research company Globalysis Ltd.


“This place will still be the leading market in the region in 10 years time simply because of the numbers of properties that are already here,” Fahrenkopf told reporters yesterday in Macau, where his group is helping organize Global Gaming Expo Asia 2008, which started yesterday and ends tomorrow.


The number of casinos in Macau has more than doubled to 29 since the government ended billionaire Stanley Ho’s 40-year gaming monopoly in 2002 and awarded licenses to five other operators. Annual expansion of 29 percent will more than double revenue in three years while sustained 45 percent growth will achieve the same effect in a two-year period.


Strain on Infrastructure


Macau Chief Executive Edmund Ho in April said the city will stop approving land for new casinos and stop granting new licenses. It will also limit the number of gaming tables and slot machines run by existing casino operators.


“I don’t think it is unreasonable for the government to slow down growth,” said Fahrenkopf. “Macau’s gaming growth has put tremendous strain on the city’s infrastructure in the last four to five years.”


Visitors to the southern Chinese city have surged 73 percent in the four years since 2004, when Las Vegas Sands opened Macau’s first foreign-operated casino.


Authorities in Guangdong, the closest Chinese province to Macau, on June 1 changed the maximum number of times residents can visit the city each month to one from two, the Chinese-language Macau Daily newspaper reported on May 28. This came a year after a similar policy restricting residents’ travel to Macau to curb problem gambling was lifted after being in place for a month.


Competition in Asia


Macau also faces increased competition from the rest of Asia as other markets open to casinos.


Singapore in 2006 awarded bids for two casino resorts. Japan and Taiwan are also considering allowing casinos in an effort to boost tourism.


Still, analysts say travel restrictions are unlikely to slow Macau’s growth.


“China is the single largest population base in the world,” said Dean Macomber, a Nevada-based gaming consultant who has advised operators in the U.S. and Asia. “It’s hard to ignore the raw dynamics and economics of that.” – Bloomberg


Source: Today Newspaper

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