Nevada’s leading casino operators are increasingly looking overseas as domestic growth slows, with the Chinese gambling resort of Macau emerging as the biggest potential expansion engine.
Operators from Wynn Las Vegas to Las Vegas Sands to MGM Mirage are investing heavily in foreign markets including Singapore, with Macau taking the limelight as a destination which could soon rival Las Vegas in size.
"In general there’s more growth outside the U.S. than inside the U.S. in terms of new or expanded markets," said Joe Greff, an analyst with Bear Stearns.
Las Vegas and Atlantic City, the two main U.S. gambling resorts, are both forecast to grow slightly faster than U.S. gross domestic product over the next few years, said William Schmitt, an analyst at CIBC World markets.
Macau, meanwhile, is expected to grow at a compound annual growth rate of 15 percent from 2004 to 2010, when the market could total $13 billion a year, he said.
That is more than double the $6 billion Las Vegas Strip casinos won from gamblers last year. Currently the Macau market is slightly smaller at $5 billion.
Another investment bank, Jefferies & Co., projects that the Macau gaming market could hit $12.9 billion in 2008, and later grow to $15 to $16 billion, bolstered by high-end projects in a market that currently focuses on day-trippers, and new ferry, rail and bridge infrastructure that will boost access from nearby Hong Kong.
Las Vegas Sands, which was the first U.S. operator to open in Macau, reported last week that its fourth-quarter casino revenue there rose 61.3 percent to $270 million, while adding that China planned to raise the number of mainlanders eligible for visas to visit the island resort.
"These kinds of metrics continue to support the bullish outlook for Macau and justify our investment there," Las Vegas Sands President and Chief Operating Officer William Weidner said.
MGM Mirage, the world’s second-largest gambling company, and Wynn Resorts are both also opening casinos in Macau.
In a conference call last week, Steve Wynn gave an update on his Macau casino. He said the casino will be of such a high level of service and quality of design that it will change the existing Macau model that currently hinges on big players in VIP rooms.
Wynn added that construction should be completed by July 27, but because he wants to deliver the best customer service, the casino won’t actually open to September 5, which would give employees a chance to be trained properly.
Phase II of Wynn Macau will come in two stages with two sets of 150 table games, bringing the total to 500. The first 150 games will be added in the third quarter of 2007 and next 150 games within 90 days after that.
Overall, Wynn’s Cotai Strip in Macau will occupy 54 acres and include three hotel sites. "They will be operated by ourselves with some partners," Wynn said.