The baccarat tables at the Venetian’s Red Dragon section still teem each night with hundreds of the Chinese players who’ve fueled Macau’s breathtaking shot to the top of the gambling world.
But as gamblers place bets of 500 patacas (US$65) and more in Las Vegas Sands’ popular casino, cheering and bellowing with each flip of a hand, construction cranes stand idle atop hulking steel shells of three half-finished hotel towers across the street.
The hot streak that turned Macau into the world’s gambling capital is cooling as global economic and financial woes delay new projects, cut into incomes and hurt tourism. Tightened travel restrictions on Chinese tourists, the engine behind Macau’s growth, also are taking a toll, and revenue growth is slowing for the first time in years.
“Without a doubt, the incredible heat that we’ve seen in the market before is coming off,” said Anthony Lawrence (a former managing editor of the Taipei Times), publisher of the territory’s Destination Macau magazine.
The silenced towers are among the projects where struggling Las Vegas Sands Corp suspended work two weeks ago as part of its effort to comply with debt agreements backed by its Las Vegas properties.
It was a drop in Sands’ Las Vegas earnings that partly triggered the construction halts. But the troubles aren’t unique to Sands or to Las Vegas, where revenues are down across the board.
In Macau, Galaxy Entertainment Group Ltd likely won’t open its entire 2,500-room Cotai Mega Resort in Macau on time next year, some analysts say, because of a possible funding gap. And a US$2.5 billion joint venture gambling resort called Macau Studio City, near Sands’ two suspended sites on a stretch of reclaimed land known as the Cotai Strip, could face delays as well.
Macau, the only place in China where gambling is legal, boomed after the government broke up a local company’s long-standing monopoly six years ago and started welcoming US gambling powerhouses such as Sands, Wynn Resorts Ltd and MGM Mirage Inc.
As the operators built one glitzy casino-resort after another, gamblers showed up by the millions — more than half of them from China — and profits surged. By 2006, this tiny, former Portuguese colony, surpassed Las Vegas as the world’s most lucrative gambling center.
From 2003 to last year, Macau gambling revenue nearly tripled to 83 billion patacas. And this year it’s on track to top US$13 billion — more than double the take in Las Vegas. But signs of a slowdown are emerging. While an average of five casinos sprouted annually between 2004 and this year, next year may see only one major opening, from Melco Crown Entertainment Ltd.
Casino revenue, while well ahead of last year, slipped 10 percent in the third quarter from the previous three months, the second straight quarter-to-quarter decline. Macau’s leader says average monthly revenues could drop next year to 7 billion patacas compared with more than 9 billion monthly through September this year.
Fresh problems surfaced two weeks ago when Sands, the city’s leading casino operator by market share, indefinitely halted construction at its Macau projects — including Shangri-La, Traders and Sheraton hotels as well as casinos — throwing as many as 11,000 out of people out of work. Sands officials say they’re in talks with banks about new financing, but it’s unclear how long that will take or when construction might resume.
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