For the month of February 2010, all the casinos in Macau (a special administrative region of China) generated a total of $1.68 billion, which is a massive 70% increase, compared to the same period from 2009. At its peak, revenue generation hit $87.55 million per day this February. This is good news for existing casinos in Macau. The bad news is that anyone who wants to build a new casino in Macau will come face to face with state regulators that attempt to temper overheating in what seems to be the world's fastest-growing gambling market. Keep in mind that Las Vegas and Atlantic City, have been sliding into depression lately while Macau is reporting increasing revenues.
The authorities announced that they will keep track of the number of casinos being built in Macau and will limit the number of new casinos. For the time being no new casinos can be built in this special administrative region of China. Only casinos whose construction plans have already been approved will be constructed.
“Apart from those we have agreed in principle in the past, in construction and those already approved, we will regulate [the building of new casinos] in the future”, said at a news conference Macau Chief Executive, Fernando Chui.
Operators that did not submit specific project plans will see their casino development plans go up in smoke as the authorities may take back the land on which these casinos were supposed to be built. The authorities will reportedly use the repossessed land to build houses – small to mid sized residential lodging. According to Fernando Chui, it is important to speed up the development of public housing to counter rising prices on the property market.
According to Gary Pinge, Gaming Analyst with Macquarie Securities, the situation could negatively impact companies that have been banking land in the Cotai Strip. For example Wynn Resorts had been given land on the Cotai Strip to build a casino – but Wynn Resorts did not submit construction plans for the project. If the authorities decide to repeal the land, the growth of Win Resorts will be negatively impacted.
“If taken literally, the policy address could impact Wynn Macau. Any decision to repeal this land bank would have negative implications on the growth outlook for [Wynn] given lack of exposure on Cotai,” said Gary Pinge.
Las Vegas Sands Corp. on the other hand did submit construction plans to the authorities and has already started some preliminary construction work on two sites on the Cotai Strip. According to Pinge, even if Sands China loses this land, it will not have a negative impact on the company “since [it] already has close to $7 billion invested on Cotai.”
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