Macau gambling growth outstrips Vegas

By Bill Rigby

LOS ANGELES (Reuters) - 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 U.S. gambling capital.

The tiny former Portuguese colony -- the only legal place to make bets in China -- has posted a 47 percent 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 U.S. entrants like Las Vegas Sands Corp (LVS.N: Quote, Profile, Research, Stock Buzz), 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 $10.34 billion (83 billion Macau patacas) in 2007, up 47 percent from about $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 (MGM.N: Quote, Profile, Research, Stock Buzz) 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 U.S. economy.

For calendar year 2007, casinos on the Las Vegas strip took in gambling revenue of $6.83 billion, according to Nevada's Gaming Control Board on Tuesday, up only 2.1 percent 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 $12.85 billion for 2007, up only 1.8 percent 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.  Continued...