Macau July Gambling Revenue Jumped 48%

Macau, the only place in China where casino gambling is legal, has seen gambling revenue soar since the end of 2009 as players continue to place bets despite China's tightening steps and local government policies aimed at slowing growth to a more measured pace.

Gambling revenue rose to 24.21 billion patacas (US$3.01 billion) last month from 16.31 billion patacas a year earlier, according to Macau's Gaming Inspection and Coordination Bureau.

The news helped shares in five of Macau's six casino operators rise to records in Hong Kong, while Wynn Macau Ltd.'s shares climbed back to a record set last week. Galaxy Entertainment Group Ltd. led the way, rising 8.2% to HK$21.85 (US$2.80). Melco International Development Ltd., was the second-biggest gainer, climbing 7.4% to HK$10.34.

July's figure proves industry momentum is very strong and dismisses concern that a tighter China credit market may have slowed VIP revenue growth, J.P. Morgan analyst Kenneth Fong wrote in a report Monday.

Despite China's five interest-rate increases in the past nine months, the real interest rate remains negative, which analysts say encourages people to seek alternative investments outside of China.

Macau overtook the Las Vegas Strip as the world's biggest gambling market in 2006 and is poised to rake in five times the Strip's gambling revenue this year. CLSA said rising bet sizes, as opposed to increased visitation, remain the key driver of Macau's growth, with revenue from high-roller customers rising 50%-55% in recent months.

After the latest data, RBS analyst Philip Tulk said he is raising his brokerage house's estimate for Macau's 2011 gambling revenue by 6% to US$34.1 billion, which would imply year-to-year growth of 45%. He is also raising estimates for 2012 and 2013 by a similar magnitude.

Virtually the entirety of the raises relate to the VIP segment, which is showing better-than-expected resilience, he said.

July's revenue total was second only to the record 24.31 billion patacas hit in May, a result that was bolstered by a string of Chinese holidays and the opening of Galaxy Entertainment's new casino resort. In the January-July period, Macau's gambling revenue rose 45% from a year earlier.

U.S. casino companies Las Vegas Sands Corp. and Wynn Resorts Ltd. have been benefiting from the strong growth at their Macau units as a recovery in Las Vegas remains patchy. MGM Resorts International is profiting, too, through a joint venture with a daughter of Macau gambling magnate Stanley Ho.

The three operators compete against Mr. Ho's SJM Holdings Ltd., the market's largest operator, with about one-third of the territory's gambling revenue Melco Crown Entertainment Ltd. and Galaxy Entertainment.

online.wsj.com