HONG KONG (Reuters) - Gambling revenue in glitzy Macau, the world’s largest gaming destination, broke a new record in October rising 42 percent on the year to 26.9 billion patacas ($3.4 billion), with relentless demand from Chinese visitors continuing to defy concerns over the global economy and a domestic credit squeeze.
Widely expected to hit a new record because of China’s Golden Week holiday, October revenue easily beat August’s high of 24.8 billion patacas, according to government figures released on Tuesday.
The former Portuguese colony, an hour from Hong Kong by ferry, is the only place in China in which casino gambling is legal, helping revenue there exceed that of neon rival Las Vegas fivefold.
Despite strong third-quarter earnings, shares of the multi-billion-dollar gaming companies operating in the enclave have been volatile, with investors wary of slowing growth next year.
Las Vegas Sands Corp, Sands China Ltd, Wynn Resorts Ltd, Wynn Macau Ltd, MGM Resorts International, MGM China Holdings Ltd, Melco Crown Entertainment Ltd, Galaxy Entertainment Group Ltd and SJM Holdings Ltd, are the listed entities of the six licensed Macau operators.
Worries that a credit squeeze in China would impact Macau’s lucrative junket industry has sapped sentiment over the last two months despite the junkets, facilitators who advance loans to wealthy Chinese gamblers and collect debts afterwards, saying it was business as normal.
Casino executives have said they do not expect growth to stay at 40-50 percent indefinitely, but that fundamentals of the lucrative industry remain solid because of factors including still untapped Chinese demand, an appreciating renminbi, and rising wages across the country.
On Tuesday, shares of the Hong Kong-listed gaming companies pared earlier losses on Tuesday after the results, outperforming the benchmark Hang Seng Index’s 2.49 percent decline.
The October revenue figure of $3.4 billion is more than half of what Las Vegas is expected to make for the whole of 2011.
“This may imply that the market has not shown any signs of slowing at all. It is a very good indication, said Victor Yip, analyst for UOB Kay Hian brokerage in Hong Kong.
Infamous as a one-time hotbed for piracy and smuggling, Macau has pushed companies to expand their non-gaming amenities to attract more families and leisure tourists. The tiny enclave sees a monthly visitor inflows of close to 3 million.
Yet Macau pales in comparison to Las Vegas in non-gaming revenue spending, with relatively few cash-rich mainlanders arriving with the intent of indulging in spas or watching shows.
He Xing, one of a growing number of female punters, said she came to Macau with friends to gamble. At 10.30 a.m. during Golden Week, the thirty year old is waiting for her turn to bet at MGM’s Macau casino.
“It’s fun; I come here whenever I can,” said He, sunglasses perched atop her tinted hair and a Louis Vuitton bag dangling from her right arm.
Fitch Ratings said in a report released on October 28 that it had seen no evidence that tighter credit conditions and slowing growth in China were pressuring gaming demand in Macau.”
“Fitch continues to believe that the Macau market will grow solidly, albeit at a decelerating rate, moving into 2012. Fitch’s 2012 base case forecast assumes that revenue will grow by 20 percent or more again next year,” the agency said.
Editing by Chris Lewis