Las Vegas debates how Macau will grow

By Deena Beasley

LOS ANGELES (Reuters) - The biggest bet in Macau is how fast luxury shopping and other non-gambling pleasures will take off in the Chinese casino enclave, and the Las Vegas players putting chips on the table agreed this week.

Macau gambling revenue has surpassed that of the Las Vegas Strip, and casino operators see more and more Chinese coming, but a key question is whether the shoppers heading for Hong Kong will make a detour.

Las Vegas Sands Inc. (LVS.N: Quote, Profile, Research, Stock Buzz) plans to build more than 3 million square feet of shopping malls and luxury hotels, expecting the melange of activities that now drive Las Vegas will generate new business in Macau, rather than increased competition that would drive down profits.

"If we can convert 15 to 20 percent of the mainland Chinese who are coming to Hong Kong to come to Macau to shop, dine and be entertained ... that changes the game," Las Vegas Sands' Chief Operating Officer William Weidner said, speaking at the Reuters Hotels and Casinos 2007 Summit in Los Angeles.

Weidner likened Macau to 1960s and 1970s Las Vegas, but said casino operators this time around will want to cash in on non-gambling opportunities rather than cede the gains to other developers.

MGM Mirage (MGM.N: Quote, Profile, Research, Stock Buzz) is also pushing into Macau, but at a much smaller pace and so far with less emphasis outside gambling. Sands CEO Sheldon Adelson is "betting big time on conventions," MGM Chief Executive Terry Lanni sold the Summit. "I would say on this one he is very ambitious."

Macau has had gambling for more than a century but only recently allowed foreigners to invest, sparking a building rush. The country has been increasing the number of visas for mainlander visits, but travel is still restricted.

Gambling revenue rose 23 percent last year to $7 billion.

Merrill Lynch has estimated that between 2007 and 2010, $20 billion of new capital will have entered the Macau market, compared with the $33 billion that the Nevada State Gaming Control Board has calculated exists on the Las Vegas Strip today.

Sands is leading the push into Macau. It operates the Venetian resort and the Sands Expo and Convention center in Las Vegas and opened its first Macau casino in 2004 and will open this summer its Venetian Macau complex, located on the Cotai Strip -- a section of reclaimed land that developers are fashioning into a Vegas-like string of casinos, shopping malls, hotels and theaters.

MGM Mirage Inc. (MGM.N: Quote, Profile, Research, Stock Buzz), which expects to unveil its first Macau casino by the end of the year, said this week that its second Macau project will be located on the Cotai Strip.

It is not clear which part of Macau will have the high rollers and which the average gamblers, though. Sands expects Cotai to become the high-roller hub.

"My guess is it is exactly the opposite," Lanni said, predicting the high-end gambling hub of the area would remain on the peninsula area where most new casinos have been built.

Makers of gambling equipment are eyeing Macau sales. But casino table game supplier Shuffle Master Inc. (SHFL.O: Quote, Profile, Research, Stock Buzz) said the company's greatest success has been in mass-market slots-only parlors.

"In Macau, there are not a lot of locals," explained Shuffle Master CEO Mark Yoseloff. "Generally, (higher-end) players traveling to Macau want the live table experience ... as this develops into a broader spectrum of players -- the whole market will change as there is a greater expansion of travel to Macau."  Continued...