Macau Steals Gaming Crown

Though widely predicted to happen sometime late this year, Macau has officially brought in more gaming revenue than the venerable Strip to the tune of $20 million more in September alone.

This year Macau is expected to rake in about US $6.8 billion, while the Las Vegas Strip will earn about $6.6 billion at the tables.

The Macau market, where stories of people waiting on line to get spaces at gaming positions circulate fast and furious, is in an unprecedented period of growth where any new casino hotel product is instantly absorbed. It’s helping to push revenues to record breaking heights on a monthly basis.

In September, reported Gross Gaming Revenues bested numbers posted in Las Vegas and grew by 36.6% to US $576 million according to the Macau Gaming Bureau. Several casinos opened or expanded in August and September, which is upping the number of gaming positions in the region and helping to increase gaming revenues.

There are now 23 casinos in the market including new entries such as Wynn Macau and Galaxy Star World. A major expansion at Sands Macau also debuted at the end of August. These casinos helped propel a visitation increase by 20.3 percent in September compared to the same period last year and October is looking to top those already strong numbers.

"Yep, the recent numbers look like our estimate for 2006 will come in line -- currently, the monthly run rate for Las Vegas would put it at an annualized revenue rate of $6.6-billion, approximately," Globalysis partner Jonathan Galaviz told the BBC. Earlier this year, Globalysis predicted Macau would overtake Las Vegas. He expects Macau to bring in up to $8 billion in gaming revenue in 2007.

At the end of September, the Chinese owned Macau had approximately 2,440 tables and 5,165 slot machines were in use in the Macau market. The Sands Macau expansion added 270 tables and 360 slots to the market, while Wynn Macau opening added 210 tables and 380 slots. Galaxy’s StarWorld, which opened earlier this month, added another 260 table games and more than 400 slots. Other casinos scheduled to open soon include, Fisherman’s Wharf, Greek Mythology, and Pier 16, according to BearSterns. Next year the Venetian Macau will open as the largest casino in the region.

Comparatively, the Las Vegas Strip has 30 casinos featuring 3,200 table games and 55,000 slot machines. This means, the average bettor visiting Macau is more interested in playing higher stakes games at the tables than the Las Vegas Visitor who is more likely to try their luck with a few slot pulls. Gambling is a more integral part of Asian cultures than in America.

According to Bear Sterns, visitation to Macau saw the majority of guests arriving from Mainland China, up 15.1%. Hong Kong visitation was up 29.4%, Taiwan visitation was up 1.4% (the first increase in almost a year), and Southeast Asia visitation was up 97.0%. Other visitation, including Europe and North America, climbed 24.7%. Overnight visitation was up 9.1% in August (note one-month lag in reporting).


Deutsche Bank analyst Karen Tang said in a statement the new statistics suggest Macau, like Las Vegas, is a market where supply drives demand: “Every year that there is a big casino opening in Las Vegas, tourists visitors and gaming revenues go up. The same thing is now happening in Macau.”

Hotel occupancy in August 2006 was 74.3 percent, slightly below the 74.8 percent occupancy enjoyed by the market in August 2005. However, supply had increased by more than 1,200 rooms during that time.

Like Hong Kong, Macau is a “special administrative region” of China. That means it has a higher degree of autonomy than other Chinese territories. Macau is a former Portuguese colony founded as the first European outpost during the 16th century. It was returned to China in December, 1999. The Chinese government promises a minimum of 50 years where this region will enjoy special status in all matters except foreign affairs and defense.

Macau is only 37 miles from Hong Kong and more than half of all arrivals were from there. Twenty Nine percent were from mainland Chinese and 14.1 % were from Taiwan. Other major visitor segments came from Japan, South Korea and Southeast Asia. Only about 10,000 people a year arrive from North America. There are more than one billion people within a two-hour flight of Macau.

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