By Kate O’Keeffe
Of DOW JONES NEWSWIRES
HONG KONG (Dow Jones)–Gambling revenue in Macau rose 42% in May from a year earlier, government statistics issued Wednesday show, as the opening of a massive new casino resort last month helped revenue rise to a record high for the fourth month in a row.
Gambling revenue in Macau, the only place in China where casinos are legal, has been growing at a blistering pace since the end of 2009 as mainland Chinese visitors continue to place bets despite local government policies to slow the booming industry and encourage a more measured pace of growth.
Macau overtook the Las Vegas Strip as the world’s biggest gambling market in 2006 and last year raked in about four times the Strip’s gambling revenue. Analysts expect Macau’s gambling revenue to grow to five times the size of the Strip’s this year.
Gambling revenue in the Chinese territory rose to MOP24.31 billion (US$3 billion) last month, up from MOP17.08 billion a year earlier, according to data from Macau’s Gaming Inspection and Coordination Bureau. The May figure was 19% more than the last monthly record of MOP20.51 billion set in April. In the year to May 31, Macau’s gambling revenue was up 43%, following a 58% surge for the whole of last year.
Following the data, RBS analyst Philip Tulk said he will need to raise his current forecast for Macau’s gambling revenue to grow 28% in 2011. CLSA analyst Huei Suen Ng noted Macau’s May revenue alone was equal to almost half the house’s $6.5 billion forecast for the Las Vegas Strip’s gambling revenue for 2011.
Macau’s May revenue was at the high end of a May 26 forecast from Bank of America Merrill Lynch for gambling revenue to hit between MOP23 billion to MOP24 billion last month. Analyst Billy Ng said the strong growth was partly due to the May 15 opening of Galaxy Entertainment Group Ltd.’s (0027.HK) new casino resort in Macau’s Cotai area.
“We see Galaxy Macau driving traffic and injecting new VIP liquidity, with growth in both mass (market) and VIP for the rest of 2011,” wrote Ng.
U.S. casino companies Las Vegas Sands Corp. (LVS) and Wynn Resorts Ltd. (WYNN) have been benefiting from the frenetic pace of growth through their Macau units as revenue in Las Vegas remains sluggish. So has MGM Resorts International (MGM) through a joint venture with a daughter of Macau kingpin Stanley Ho called MGM China Holdings Ltd. (2282.HK), which is set to list in Hong Kong Friday following a US$1.5 billion initial public offering. MGM China’s IPO was priced at the top of its indicative range, reflecting investor optimism about Macau’s gambling industry.
The three operators compete against Stanley Ho’s SJM Holdings Ltd. (0880.HK), the market’s largest operator with about one third of the territory’s gambling revenue; Melco Crown Entertainment Ltd. (MPEL), co-chaired by Ho’s son Lawrence and Australian James Packer; and Galaxy Entertainment Group, controlled by the family of Hong Kong tycoon Lui Che Woo.
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