Macau Says Gambling Revenue Surges 42 pct in May

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Guest
Published on:
Jun/01/2011

By Farah Master

HONG KONG, June 1 (Reuters) - Gambling revenue in Macau, the world's largest gaming market, jumped 42.4 percent in May to 24.3 billion patacas ($3 billion), the Macau government said on Wednesday, bolstered by unabating demand from mainland tourists eager to gamble in China's only legal casino destination.

Wealthy Chinese visitors, who account for the bulk of tourists to the former Portuguese enclave, have helped sustain record gaming revenue since the start of this year.

An hour from Hong Kong by ferry, glitzy Macau dwarfs neon rival Las Vegas in gaming revenue, with U.S. casino operators Wynn Resorts Ltd and Las Vegas Sands Corp accruing most of their earnings through Hong Kong-listed Wynn Macau Ltd and Sands China Ltd .

A week-long national holiday at the beginning of May and the opening of a new $2 billion resort by Galaxy Entertainment Group Ltd on May 15 helped propel stellar revenue gains for a fifth consecutive month.

"They have beaten my expectations. We will need to have another look at our gaming revenue forecasts for the full year on the back of this," said Philip Tulk Head of Asian Conglomerates and Gaming at RBS in Hong Kong.

But Tulk cautioned the record gains were not likely to be sustainable over the next few months.

"I would be surprised if gaming revenue growth reaches this level until maybe October. Five out of the last six years we have seen a decline in June versus May. Obviously this year has the benefit of Galaxy Macau," he said.

Investors have piled into shares of the six licensed Macau casino operators over the last year on the back of surging revenue and confidence on the outlook for the industry.

Shares of SJM Holdings Ltd , owned by the family of Macau casino mogul Stanley Ho, have gained more than 230 percent in the last 12 months, while billionaire Steve Wynn's Wynn Macau is up more than 110 percent.

MGM China, a joint venture between Stanley Ho's billionaire daughter Pansy Ho and casino operator MGM Resorts International , has priced its $1.5 billion initial public offering at the top end of the indicative range. Its Hong Kong listing on Friday will be closely watched to see whether investors continue to buy into the sector despite niggling concerns over rising valuations. [ID:nL3E7GR01V]

Investors are more bullish on operators with a greater exposure to China's burgeoning middle class, referred to as the "mass market", as opposed to the more volatile VIP segment, such as Sands China, which plans to unveil a new mass-market-focused property early next year.

Macau, once a sleepy fishing village in southern China has been transformed in recent years into a fluorescent frenzy of light, glassy edifices and playboy bunnies as the government strives to build a global tourism destination.

Despite record revenue gains, Macau still trails Las Vegas in the proportion of revenue spent on non-gaming activities such as dining and shopping -- something operators and regulators are keen to change in coming years.[ID:nL4E7GG0D6] ($1 = 8.012 Macau patacas) (Editing by Chris Lewis)

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