Macau Casino Profits Continue To Rise

As the world’s premiere market for casino gambling, Macau casinos reported a 42% revenue increase in 2011 over the previous year, an astounding figure considering the fact that 2010 also set records for gaming revenues.

A total of $33.5 billion was reported in gaming revenue in 2011 in Macau, which became part of the People’s Republic of China in 1999 after seceding from Portuguese rule. Casinos in Macau experienced a 57.8% growth rate in 2010, but the revenue generated in that year was $10 billion lower than 2011 at $23.5 billion.

“Following the 57 percent growth in Macau’s gaming revenue in 2010, nobody expected the market to grow at the rate that we have seen,” said Aaron Fischer of CLSA Asia-Pacific Markets, one of the leading investment groups in Asia. “At the beginning of 2011, we were expecting a 20 percent growth for that year, and we were among the most bullish in the sector.”

Gambling is forbidden in the mainland of China, but it is legal in Macau. As such, Macau casinos have the distinct advantage of catering to gamblers from China and other destinations in Asia that don’t offer casino gaming. Gambling revenues rose every month throughout the entire year as additional casinos opened in the burgeoning Macau market.

In 2007, Macau surpassed Las Vegas casinos in gambling revenues. Since that time, profits have more than tripled in the “Monte Carlo of the Orient.” Many casino companies based in Las Vegas are having difficulties showing profits in America, but are generating huge returns in Macau. For instance, the Las Vegas Sands Corporation has been operating casinos in Macau for the last seven years and is using its income there to offset the losses of its Las Vegas casinos.

Many economic experts were concerned early in 2011 that Macau gambling profits would suffer due to a lag in China’s economy, which led to credit tightening, a decrease in exports, and consequential negative effects on businesses and property values.

However, Macau came away unscathed as mainland China punters still travelled to the lone legal gambling destination available in the country. Whether their game of choice is roulette, craps, blackjack, poker or baccarat, industry observers believe that Chinese gamblers tend to wager considerably more than American bettors.

“At the heart of Macau’s phenomenal growth was the Chinese people’s penchant for games of fortune,” Fischer said. “Revenues in the city’s casinos could eventually exceed the whole of the U.S. market, which currently yields $60 billion in a year.”

Industry experts believe that Macau casinos will experience a slowdown in revenue growth in 2012. Economic analysts foresee gains in the range of 20-25% in 2012 for Macau’s casino industry. The smaller growth is expected partially because the preceding years have had such major revenue increases that it becomes difficult to maintain that level of growth as the bar is continually set higher and higher.