Macao gaming

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Tuesday sees the opening of the world’s largest casino on one of its tiniest spits of land. Las Vegas Sands’ $2.5bn Venetian Macao is big enough to hold 90 jumbo jets or – shimmying through streetscapes “reminiscent of Venice” – many, many customers. Can Lady Luck keep smiling on the tiny Chinese enclave and its (largely US) casino operators?

Macanese gaming has grown rapidly since deregulation in 2004. Macao, China’s only legal gambling den, last year overtook Las Vegas as the biggest gaming spot. The Venetian takes that to new levels, increasing the number of gaming tables by 20 per cent and machines by 33 per cent, according to PwC. Nonetheless, few would make a wager on the Venetian flopping. Sheldon Adelson, chief of Las Vegas Sands, recouped the $265m investment on his first Macao casino within a year of opening.

The bill is bigger this time: Moody’s expects development costs of $4bn through to the end of 2008. But visitors continue to flood Macao. Nearly 13m visited in the first half, up 21 per cent from last year. And Macanese table yields are about treble those of Las Vegas, a margin that leaves plenty of room for some competitive erosion.

That said, the Venetian – along with other upcoming mega-casinos from the likes of MGM Mirage and Steve Wynn – is still taking a gamble. The resort complex transforms a gaming den into a destination for shoppers and convention delegates: the Las Vegas model but without the Las Vegas infrastructure. Generating the bulk of revenues from non-gaming activities is harder when transport is lamentable and the labour force just 275,000 strong. Reliance on imported labour has already caused friction, resulting in the sort of protests likely to make delegates think twice about heading over for a conference.

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