Macau may not be hitting the astronomical growth targets set by excitable financial analysts, but the Chinese gambling enclave is still growing much faster than Las Vegas, the US gambling capital.
The tiny former Portuguese colony – the only legal place to make bets in China – has posted a 47% increase in annual gambling revenue, outpacing Las Vegas and pushing it even further ahead of the Las Vegas strip in terms of total gambling revenue.
That’s good news for casino operators in Macau, led by Stanley Ho’s Sociedade de Jogos de Macau (SJM), which had a monopoly on the gambling market up until 2002, and new US entrants like Las Vegas Sands Corp, which opened the world’s largest casino in Macau last summer.
According to figures released recently by Macau’s Gaming Inspection and Coordination Bureau, casinos in Macau took in gross gambling revenue of USD 10.34 billion in 2007, up 47% from about USD 7.05 billion the year before.
The huge growth comes on the back of a massive expansion on the island and an adjacent stretch of reclaimed land called the Cotai Strip. The building boom took off after Macau, which has only half a million inhabitants, was handed back to China by Portugal in 1999.
Four new casinos opened on Macau last year, including Las Vegas Sands’ massive Venetian Macao on the Cotai Strip, and MGM Mirage’s startling new MGM Grand Macau casino resort on the main peninsula.
Another casino opened in January and a further five are slated to start up this year, plus as many as nine next year. The growth in revenue may not have met the wildest hopes of some financial analysts, who were expecting an explosion of business from gambling-starved Chinese, but it is still very strong.
At the end of December, Macau had 4,375 gaming tables and 13,267 slot machines in 28 casinos. That is well up from 2,762 tables and 6,546 slots in 24 casinos at the same time a year before.
In comparison, Las Vegas, which also has some big development plans in the pipeline, is growing much more slowly. The original gambling Mecca is a much more mature market and is grappling with how to sustain growth in the face of a downturn in the US economy.
For calendar year 2007, casinos on the Las Vegas strip took in gambling revenue of USD 6.83 billion, according to Nevada’s Gaming Control Board on Tuesday, up only 2.1% from the year before.
The whole of Nevada, which includes the rest of Las Vegas and gambling outposts such as Reno and areas around Lake Tahoe, posted annual gambling revenue of USD 12.85 billion for 2007, up only 1.8% from the year before.
Those numbers are not exactly comparable with Macau, as Macau’s numbers do not reflect the discounts and incentives that casinos hand back to high-rolling VIP gamblers, which make up the majority of the island’s business. However, Macau has clearly extended its lead over the Las Vegas strip, which it passed in 2006.
Even more growth is expected in Macau this year, as more casinos are built on the main peninsula and the Cotai Strip, and the government improves infrastructure to allow more visitors in.
That means more potential gains for operators on the island, which include local firm Galaxy Entertainment Group Ltd, Las Vegas-based Wynn Resorts Ltd and Melco PBL Entertainment (Macau) Ltd, a joint venture between Stanley Ho’s son Lawrence’s Melco International Development Ltd and Crown Ltd of Australia.
China still has not opened up Macau to all its inhabitants. Despite that, Macau registered a record 27 million visitors last year, only about one million less than neighboring Hong Kong.