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Macau gaming revenues $33.5 billion last year

4 Jan 2012

By Howard Stutz
MACAU -- Forget the Strip.

Macau's 2011 gaming revenue total surpassed the combined casino revenues produced by the top 20 U.S. commercial casino markets in 2010.

And, analysts said, Macau shows no signs of a slowing.

Macau gaming revenues reached a staggering $33.5 billion in 2011, the Chinese Special Administrative Region's Gaming Inspection and Coordination Bureau reported Tuesday. The full-year gaming revenue figure for Macau represented a 42 percent increase over 2010.

"To put this year's gross gaming revenue and growth rate into perspective, total gross gaming revenue in Macau will be approximately 5.5 times the gross gaming revenue generated on the Las Vegas Strip, while the rate of growth in Macau will be roughly 10 times the rate on the Las Vegas Strip," Union Gaming Group's Macau-based principal Grant Govertsen wrote in a research note.

According to the American Gaming Association's annual State of the State, the nation's top 20 commercial casino markets produced almost $31 billion in gaming revenues in 2010. The Strip accounted for almost $5.8 billion of that.

Through October, Strip gaming revenues are up 4.8 percent over the same 10 months of 2010. Many American regional gaming markets have also seen varying degrees of gaming revenue increases.

But nothing along the lines of Macau.

Gaming authorities said revenues produced by the region's 34 casinos hit $2.95 billion in December, an increase of 25 percent over the same month in 2010. The figure was Macau's smallest monthly revenue increase in 2011.

The Macau trends are expected to continue in 2012, with gaming revenues rising 20 percent to 30 percent over 2011 .

Las Vegas Sands Corp., Wynn Resorts Ltd. and MGM Resorts International operate casinos in Macau. Las Vegas Sands this spring is expected to begin opening the initial phases of Sands Cotai Central, which includes multiple hotel-casinos and 5,800 hotel rooms.

"We continue to believe investors' concerns over a slowdown in the Macau VIP market are largely overblown and expect the late second quarter opening of Las Vegas Sands' Cotai Central to serve as an impetus to growth within the mass market segment," Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski told investors.

The Sands Cotai Central project is the only new development in Macau scheduled for the next few years. Wieczynski said the company's market share in the region will continue to expand.

The project is expected to include more lower-price hotel options than the Venetian Macau or Sands Macau .

"Given the additional convention space at Cotai Central, we believe Las Vegas Sands will be able to attract higher-margin business to a market that ... has primarily been a gambling-only destination," Wieczynski said.

Analysts said infrastructure improvements, such as expanding the border gate between Macau and mainland provinces and completion of a light rail system between Macau and Guangzhou, would help mass market visitation.

"The VIP segment should remain strong through at least the early part of 2012, as our channel checks suggest VIP demand is growing, not shrinking," Govertsen said.

Las Vegas Sands shares on the New York Stock Exchange closed Tuesday at $44.49, up $1.76 or 4.12 percent.

Shares of MGM Resorts also increased on the NYSE on Tuesday, closing at $11.11, up 69 cents or 6.52 percent.

Wynn Resorts finished higher on the Nasdaq Global Select Market, closing at $113.97, up $3.48 or 3.15 percent.

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