Macao logs over 10 bln USD in gaming revenue of 2007

MACAO -- Macao casinos saw their gaming revenue surge to 83 billion patacas (10.4 billion U.S. dollars) in 2007, up 46.6 percent compared with 2006, according to the latest statistics released by the government's Gaming Inspection and Coordination Bureau (GICB).

The statistics show that, Macao's gross revenue from games of fortune (casinos) and Pari-mutuels (horse and dog races) and Lotteries amounted to 83.847 billion patacas (10.48 billion U.S. dollars).

By the end of last year, a total of 28 casinos were in operation and gaming revenue in the fourth quarter of last year has already exceeded the total of 2002, when there were only 11 casinos, according to GICB.

But the fact that 67 percent of the total gaming revenue, amounting to 55.76 billion patacas (6.97 billion U.S. dollars), came from Macao casinos' VIP rooms, where high-rollers gamble, shows that the gaming industry is much too dependent on high-roller market, said Dr. Fong Ka Chio, director of Institute for the Study of Commercial Gaming at the University of Macao.

He said too much dependence on the high-roller market will bring uncertainties to Macao's gaming industry, as policy changes in neighboring regions can pose considerable impact on the market, and large amounts of money transaction in gambling will also lead to illegitimate activities like money laundering.

Before the liberalization of Macao's gaming industry, VIP room revenue contributed over 70 percent to the total gaming revenue, but as the monopoly ended in 2001 and competition for market share heightened, it was lowered to 60 percent in some previous quarters.

Fong proposed that the government should diversify its industry development, by introducing more leisure entertainment facilities in Macao, in a bid to increase the income from non-gaming sectors, which will help shape a healthier economy in the special administration region's (SAR).

He added that regulation of money transaction in the VIP room gambling should also be stepped up, as the high-roller market further expands.

Based on the current growth rate, Macao's gaming revenue is expected to surpass America's Nevada state, which recorded 12.8 billion U.S. dollars in last year's gaming revenue, up 2.8 percent year-on-year, according to a report by the New York Times. The Las Vegas Strip is located in Nevada.

However, experts are also concerned about how long Macao's gaming industry boom can last, as several Asian nations are set to open its casinos in the coming years, heating up the market competition in the region. Singapore, The Philippines and Vietnam have laid out plans to develop their gaming industry following the Las Vegas mode, which means more integrated mega casino resorts will spring up in the region.

Professor Tsang Chung Luk of Macao Polytechnic Institute estimated that in two to three years, Macao's gaming market growth will slow down, and it is evident that the international market is not so optimistic about the island city's gaming industry development, as some of the Las Vegas gaming companies with investment in Macao saw their share prices drop in the past months.

Therefore, the gaming companies should be more discreet and rational about expanding their casinos, otherwise their future profit level will be driven down once the gaming market is saturated, he said.