Macau Decision To Temper Casino Expansion Helps Las Vegas Sands

Tuesday was a day that Las Vegas Sands and other gaming companies with casinos in Macau had been waiting for patiently. Macau Chief Executive Fernando Chui was set to unveil his plan to curb the growth of the casino industry.

Among the ideas that were circulating as possibilities was a cap on the number of tables at Macau casinos. That would have hurt both the existing casinos and those developers with future plans of moving into the area.

Instead, Chui outlined a plan that does not place a cap on the amount of tables. Chui's idea is to stop the building of new casinos that are not already in the development process. That would be a blow to companies such as Harrah's Entertainment that has yet to move into the Macau market.

Others, however, such as Sands, Wynn Resorts, and MGM Mirage, had to be ecstatic with the news. The plan, if executed, would mean that the billions of dollars currently being generated from casinos in Macau would stay within the core group of developers who built these casinos.

All three of the US-based companies are among this group. In February alone, revenue at Macau casinos jumped seventy percent. While that is an unprecedented figure, it also has caused concern among members of the Macau government.

Chui explained on Tuesday that he would like to see Macau diversify economically. In order for that to happen, there would have to be an emphasis on building other industries outside of their gambling casinos.

Several years ago, the Macau government ended the monopoly on the gambling industry that was held by casino tycoon Stanley Ho. In the period after that decision, Sands and the other US gaming companies seized the opportunity and build mega-resorts like the ones found in Las Vegas.

SJM Holdings, Melco Crown Entertainment, and Galaxy Entertainment Group also have casinos in Macau. Shares of the US-based gaming companies rose after the news for the first time in a couple of days, but it was the size of that jump that showed that investors may have been calmed by the news out of Macau.

LVS stock closed Tuesday up 7.33%, at $20.06. It was the first time since October of 2008 that Sands stock has topped the $20 a share plateau. MGM and Melco Crown both saw their stock price rise by more than eight percent for the day, closing at $12.30 and $4.85, respectively.

March 17, 2010
Posted By Terry Goodwin
Staff Editor, CasinoGamblingWeb.com
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