The best of times; the worst of times

While revenue numbers for the first half of 2008 continue to show dramatic growth for gaming in Macau, the future of the former Portuguese enclave is more uncertain than ever.
 
Revenues in the second quarter grew by 47.6 percent over the same period in 2007. The VIP market led the way by growing by 52.2 percent, but the mass market growth held its own at a 38 percent growth clip.

Jefferies & Company estimated in a new report that Macau will grow by 30 percent in 2008 and 10 percent in 2009.     

Revenues in the first half of 2008 were US$7.4 billion, or 70 percent of the more than $10 billion the Special Administrative Region posted in 2007.

Growth is predicted to slow down for several reasons. Additional capacity will fall in 2009 with a few casinos opening, including the Melco Crown’s City of Dreams and the Four Seasons, with a casino operated by Las Vegas Sands.

A cap on the commission rate paid to VIP operators also is expected to adversely affect the market. The cap was imposed last month when casinos failed to reach a consensus on the cap and how to implement it.

But the big challenge to the Macau’s future comes from the Chinese government, which last month announced additional restrictions on travel from the mainland, a main source of customers for the Macanese casinos.

Chinese visitors to Macau can only stay seven days if they do so before traveling to a third destination. Previously, a 14-day stay was permitted. And visitors who violate that rule will only be allowed a two-day stay if they apply for visitation using the same stipulations. A second violation will result in all future applications being refused.

Edmund Ho, the chief executive of Macau, earlier this year imposed a moratorium on new casinos to try and cool the spectacular growth.