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Analysts Suggest Macau Gambling Market May Fizzle Out

From the outside looking in it appears as though the Macau casino gambling industry is indestructible. Casinos in Macau have experienced never-before-seen revenue increases over the past year, with each month turning out even more insane revenue figures than the past.

The majority of the gaming increase has come from the Chinese government easing their visa restrictions to Macau. With gamblers able to gain visas, high rollers have been flocking to the new gambling capital of the world, and millions of dollars are being lost in the process.

Now, analysts are fearful that the trend of revenue increases cannot continue. At some point, says Deutsche Bank analysts, the high rollers will be unable to sustain the level of losing they have endured over the past year. At that time, Macau casinos could experience their first slump.

Highlighting the revenue boom has been the fact that it has occurred during one of the worst global meltdowns in decades. Many within the gaming industry have asserted that the Macau casinos are immune to the economic conditions of the world. It is a suggestion that comes from how Las Vegas had endured recession's in the past in the US. Not everyone, however, is a believer.

"We disagree with the consensus view that Macau is immune to a recession," said Deutsche Bank, in a note to clients on Friday morning, as reported by The Wall Street Journal. The company's claim is backed up by the recent slide of gaming stocks in the Asian market.

Sands China, Wynn Macau, and SJM Holdings, the three largest gaming stocks on the Asian market, all experienced a sharp decline in stock price on Friday. Sands closed down eleven percent, while Wynn and SJM both fell just over eight percent. The stock drops have not been a direct relation to casino earnings, as all of the Macau casinos continue to prosper during the economic crisis.

Wynn, Sands, and MGM are three companies that jumped into the Macau market when their US-based casinos started to struggle. LVS CEO Sheldon Adelson was the leader, investing billions of his own money in the Macau operations. The three US-based companies have been paid off nicely, with stock in both Asia and the US rebounding since the 2008 global economic recession.

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