Macau Seedy Casino Industry a Goldmine
In an article published by the Sydney Morning Herald Tuesday morning, it is revealed how Macau's casino industry has flourished despite a worldwide economic crisis. Gaming revenue has roared above that of Atlantic City and Las Vegas combined according to the report.
One of the primary reasons for Macau's success: Families from Mainland China are flooding the city.
"They don't drink and they don't like to waste money on consumption when they could be investing it on the baccarat table," says Glenn McCartney, who runs a Macau casino tourism consultancy called Insights Unlimited. James Packer and Lawrence Ho, with their Melco Crown joint venture, are punting that they can work the cultural contours of Chinese gambling better than anyone else.
China's economy is defying the world trend it seems. China's gross domestic product expanded 7.9 percent in the second quarter as the nation became the first major economy to rebound from the global recession.
But Macau and its casinos received yet another boost on Monday after China decided to ease restrictions on its citizens traveling from Guangdong province to Macau, sending casino stocks soaring.
More than three-in-five gamblers in Macau come across the border in mainland China and they're losing money at a rate the world has previously never seen. "September looks like being 30 per cent to 40 per cent up on September 2008," says David Green, a PricewaterhouseCoopers gaming consultant to Macau.
Gambling magnates Packer, Steve Wynn and Macau's deeply rooted Stanley Ho all look to take full advantage.
Wynn expects to make out like a bandit by raising as much as HK$12.6 billion ($1.63 billion) in a Hong Kong initial public offering of its Macau casino assets, two people familiar with the matter told Bloomberg News on Monday.
Global investors are likely to be drawn to the IPO as it's the first foreign casino operator to be listed in Hong Kong, said Steven Leung, an institutional trader at UOB-Kay Hian Ltd.
Six cornerstone investors have pledged to buy up to $250 million of the shares, the draft prospectus said. These include Malaysian billionaire Quek Leng Chan, who controls Hong Leong Co., agreeing to buy $80 million.
Walter Kwok, who last year was ousted as chairman of Hong Kong developer Sun Hung Kai Properties Ltd., agreed to buy $20 million while Thomas Lau, brother of Hong Kong billionaire Joseph Lau, will buy $50 million, the document said. CMY Capital Markets Sdn. Bhd., a Malaysian company controlled by Chua Ma Yu, will buy $70 million, it said.
Wynn expects China to ease travel restrictions for citizens of Mainland China even further over the next year.
Jagajeet Chiba, Gambling911.com
