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Jul. 27, 2008
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INSIDE GAMING: Macau casinos face Olympic hurdle

HOWARD STUTZ
INSIDE GAMING

Casino operators in Macau aren't expecting much of a revenue bump from the Beijing Summer Olympic Games, which begin Aug. 8. Wall Street thinks the numbers may even dip.

Macau is almost 1,300 miles south of Beijing, so a side trip by Olympic attendees is not practical. Deutsche Bank gaming analyst Bill Lerner, who was in Macau last week, said the country has caught Olympic fever. Banners proclaiming the Olympics are rampant throughout Hong Kong and other areas.

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    • "People are going to stay home and watch the Olympics rather than travel," Lerner said. "The government wants everyone watching."

    In 1984, Las Vegas tourism officials funded an advertising campaign aimed at people attending the Summer Olympic Games in Los Angeles. A smaller effort took place in 2002 at the Winter Olympic Games in Salt Lake City. The efforts attracted a small spillover audience.

    Wynn Resorts Ltd. Chairman Steve Wynn isn't banking on an Olympic boost for Wynn Macau.

    "It's going to be a great event for Beijing, but it's not going to mean much for Macau," Wynn said.

    Still, Macau is getting a taste of the Olympics. May's torch relay carried the Olympic flame past Macau landmarks. This week, the U.S. Olympic men's basketball team, led by NBA superstars Kobe Bryant and LeBron James, play a pair of tune-up games against Turkey and Lithuania inside the 15,000-seat Cotai Arena at The Venetian Macau.

    Macau gaming revenue -- $10.3 billion in 2007 -- is still climbing. Through the first six months of 2008, gaming revenue is $7.4 billion, up 40 percent from a year ago.

    The Chinese government has taken steps, however, to slow visitation. New travel policies and visa restrictions have been implemented to cut the number of visits to Macau from mainland Chinese citizens. The move has reduced mass-market casino visitors, but has not lowered high-end casino play. In April, the Macau government said it would halt awarding any new gaming licenses through 2009.

    Macquarie Group analyst Gary Pinge, who is based in Hong Kong, thought the Chinese government was trying to stem the flow of illegal workers from mainland China into Macau. Investors may now be gun-shy because of political risk tied to gaming.

    "We are uncertain as to the exact level to which (China) wishes to slow down the gaming market," Pinge said.

    ***

    MGM Mirage joint-venture partner Pansy Ho told Bloomberg News that a second casino project with the Las Vegas company on the Cotai Strip was proceeding despite the Macau government's gaming license moratorium.

    "Our project is still definitely going to go along. It's only a matter of the processing," she said.

    Howard Stutz's Inside Gaming column appears Sundays. E-mail him at hstutz@reviewjournal.com or call 702-477-3871.

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    Ron wrote on July 31, 2008 01:54 PM: .... China like it or leave it but if you are in the gaming industry at any level weak up and smell the coffee because in a few years you will be sitting at the table having that conversation that we have all had at one time or another “Only if”.


    Ron wrote on July 31, 2008 01:53 PM: Macau Gaming is a Chinese Government Project; it is not like here where you have Democratic back projects and Republican backed projects that can be halted if one side decides to flex’s their vote majority. Macau is more important to the Chinese Government than it is to the MGM, Sands Corp. or Steve Wynn. The Chinese government has restricted the travel to some extent but it has not restricted it to the point that it would ever hurt the gaming operators. Their revenues may have taken a drop but the numbers are still miles ahead of Las Vegas revenues and we are in “the land of the free”. Macau is a faucet economy and the Chinese Government controls the handle. They can turn it up when they want, at present 4 of the 30 provinces in China are allowed to travel to Macau and the revenues surpassed the entire state of Nevada. As more accommodations become available the more provinces will be able to travel. Macau has to be able to handle the number of travelers before the Government will allow more to travel. With the current cut backs in travel to Macau their number surpass Nevada’s to date this year. No matter what you think about China, Macau is the Las Vegas of the 70-2000’s in the US. It is Las Vegas on steroids and the possibilities are in creditable. Millions of Americans at one point had a negative attitude about Sin City but look at us now. Gaming was not an acceptable industry for years but now it is big business at it best.


    ..temujin ... khan of the yakka mongols ... wrote on July 27, 2008 01:00 PM:
    You like Chinese sticky rice....??


    Manny Cuaresma wrote on July 27, 2008 12:58 PM: Big casino operators in Macau like MGM, Sands/Venetian, and Wynn are under the mercy of the Chinese government. They control the flow of mainland Chinese entry into Macau.
    If the communist Chinese government decides to close the gates, Macau will be a ghost town and those casinos will close as well.
    Too many eggs in one basket.