By KATE O’KEEFFE June 1, 2011
HONG KONG—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.
Higher gambling revenue in Macau in May can be attributed in part to the Galaxy Entertainment Group’s newly opened Galaxy Macau casino resort, analysts said.
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 24.31 billion patacas ($3 billion) last month, up from 17.08 billion patacas 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 20.51 billion patacas 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 23 billion patacas and 24 billion patacas last month. Analyst Billy Ng said the strong growth was partly due to the May 15 opening of Galaxy Entertainment Group Ltd.’s 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,” Mr. Ng wrote.
A croupier waits for customers to arrive inside the Galaxy Macau casino on May 15. The $1.9 billion Galaxy Macau, which has 450 tables and features more than 2,200 hotel rooms, hopes to attract visitors from across Asia in an opening that analysts said will further boost growth in the world’s biggest gaming hub.
U.S. casino companies Las Vegas Sands Corp. and Wynn Resorts Ltd. 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 through a joint venture with a daughter of Macau kingpin Stanley Ho called MGM China Holdings Ltd., which is set to list in Hong Kong on Friday following a $1.5 billion initial public offering. MGM China’s IPO was priced at the higher end of its indicative range, reflecting investor optimism about Macau’s gambling industry.
The three operators compete against Stanley Ho’s SJM Holdings Ltd., the market’s largest operator with about one-third of the territory’s gambling revenue; Melco Crown Entertainment Ltd., co-chaired by Mr. Ho’s son Lawrence and Australian James Packer; and Galaxy Entertainment Group, controlled by the family of Hong Kong tycoon Lui Che Woo.