Macau Casinos Top Las Vegas; Asian Gaming to Double to $23 billion by 2010

Foreign investors are staking $20 billion on making Macau  into the gambling capital of Asia. Macau is already the biggest single gambling market in the world. In 2006, Macau's casinos raked in an estimated $6.8 billion, overtaking the Las Vegas Strip's estimated $6.5 billion, according to Rob Hart, a Hong Kong-based gaming and property markets strategist for Morgan Stanley. (Bloomberg report)

Macau (population: 500,000), a former Portuguese colony that's now a special administrative region (SAR) of China, is the only place in greater China -- the mainland, Hong Kong, Macau and Taiwan -- where its 1.3 billion people can gamble in casinos. 

  • In total, 2.2 billion people live within five hours' flying time of Macau, according to CLSA Asia-Pacific Markets, compared with 410 million in the same radius of Las Vegas. 
  • At the Sands Macau, the world's biggest casino when ranked by the number of tables, as many as 40,000 gamblers a day besiege the croupiers.
  • Across Asia, casino companies will spend as much as $71 billion over the next five years, according to a Merrill Lynch analyst. 
  • Annual gaming revenues for the region could double to $23 billion in 2010 from $11.9 billion in 2005, according to a 2006 PricewaterhouseCoopers LLP report.

Gaming (all types, including video games, mobile games, and casinos) seem to have become a the most popular entertainment worldwide. Most of the casino stocks are on a tier: 

  • As of Dec. 29, Las Vegas Sands' New York Stock Exchange- listed shares had more than tripled, to $89.53, from its initial share sale in December 2004. 
  • Wynn Resorts' stock rose sevenfold, to $93.85 as of Dec. 29, since it listed on NASDAQ in 2002.
  • MGM Mirage stock hit a 52-week intraday high of $57.80 on Dec. 20, and closed at $57.28 on Dec. 29. 
  • Shares of Melco International were up 18-fold to 19.22 Hong Kong dollars from their price on Dec. 31, 2003. 
  • The stock of Hong Kong-listed Shun Tak Holdings, Ho's Macau-focused conglomerate, has more than quadrupled to HK$12.32 since Dec. 31, 2003.

Macau now earns 70% of its revenue from casino taxes. The economy has doubled in four years to $12 billion, or $24,000 per capita, making the enclave the fourth richest region in Asia after Japan, Singapore and Hong Kong, according to Macau government figures. In the third quarter of 2006, gross domestic product rose 11% compared with the same period in 2005.

Casinos had been operating in Macau since the 1930s. In 1962, the monopoly franchise was awarded to Ho and a group of partners. Back then, the territory's most noticeable landmark was the 17th- century hilltop facade of ruined St. Paul's church. In 1972, Ho contributed the Hotel Lisboa.

Change began in 1999, when Portugal handed Macau back to China under a Hong Kong-style one-country, two-systems arrangement that gave Macau administrative authority over many local issues not related to defense and foreign affairs.

Tourist arrivals shot up to 18.7 million in 2005 from 12 million in 2002, with 60% of the visitors from the mainland. The number for 2006 was expected to top 20 million, according to Hong Kong-based CLSA Asia-Pacific Markets.

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