U.S. casino operators, faced with little appetite for commercial casinos in states outside of Nevada, New Jersey and Mississippi, are looking to Asia for their biggest growth opportunities.
"There is no question that international is the place to be," Gary Loveman, chief executive of Harrah’s Entertainment, said at a G2E panel discussion last week.
Harrah’s, the world’s largest gambling company, is "exploring entry opportunities" in Macau, the Chinese enclave that is Asia’s answer to Europe’s Monaco, after sitting out the first round of licensing concessions, Loveman said.
Las Vegas Sands, owner of The Venetian in Las Vegas, opened Macau’s first foreign-owned casino last year.
Some 226 million mainland Chinese are now eligible to visit Macau without a visa, said Brad Stone, Sands’ executive vice president. He said about 11 percent of the U.S. population visits Las Vegas, while just 2.5 percent of China’s much larger population travels to Macau.
"It is a significant growth opportunity," Stone said.
Sands is set to open a second Macau property in 2007. MGM Mirage and Wynn Resorts are also building Macau resorts.
Gambling is booming in the former Portuguese colony, an hour’s ferry ride from Hong Kong, since a 42-year monopoly held by tycoon Stanley Ho came to an end in 2002 and Beijing eased travel restrictions on its citizens.
Macau hosted 9.5 million tourists from China, while travel is up 17 percent for individuals and 10 percent for groups, said Ron Kramer, Wynn’s president.
Wynn’s Macau project — a smaller version of the crescent-shaped tower the company opened earlier this year in Las Vegas — is slated to debut about a year from now.
"Macau is on track to become the destination, convention and entertainment zone for Southeast Asia," he said.
MGM’s Macau project is expected to open in 2007.
"MGM is a powerful name in that part of the world," said Jim Murren, MGM’s chief financial officer. "People think we still make movies, don’t tell them."
All three companies, as well as Harrah’s, are also vying to build at least one of the two casinos the island nation of Singapore has decided to allow.
Singapore’s government is expected to set its next round of requests for proposals later this month.
Elsewhere in Asia, Thailand’s government is considering whether to allow casinos.
For U.S. gaming operators, this means it is getting more difficult to rationalize investing further domestically in states without liberal gaming license policies.
"Illinois has a governor who doubled the gaming tax to 70 percent from 35 percent ... Michigan ended up raising its tax from 18 percent to 24 percent," said J. Terrence Lanni, chief executive of MGM. "With that kind of volatility it is hard to justify capital investment."
Nevada, Atlantic City and Mississippi levy gambling taxes ranging from 6.75 percent to 12 percent.
Pennsylvania recently approved gambling legislation allowing slot machines at racetracks. But the measure remains mired in court and is unlikely to receive final clearance for at least another six months, said Frank Fahrenkopf, president of the American Gaming Association.
In addition, the state’s 50 percent tax on gambling revenue will mean relatively modest investment by casino operators, industry officials said.