If you thought Las Vegas was where the big gamblers went to play, you’re behind the times. Vegas has been overtaken by the new hottest gaming location: Macau, China.
It wasn’t always this way. Before Las Vegas Sands (LVS) opened Sands Macao in 2004, Stanley Ho had a monopoly over Macau’s gaming. Corruption and mob activity were rampant. But when the government opened up the region to five new operators, the players started pouring in.
Las Vegas Sands made enough money in its first year there to pay for its first casino. (It’s opening another major resort in the next few weeks.) Others soon followed — Wynn Resorts (WYNN), Melco Crown (MPEL), Galaxy, and MGM Resorts (MGM) — turning Macau into the center of the gambling universe.
In Vegas, They Play for Chump Change
High rollers are treated like royalty in Macau, as they are anywhere they go. But these VIP players bet big — bigger than they do stateside. Baccarat’s the big game in Macau, with the game generating in excess of 70% of the revenue in Macau casinos.
In 2011, Macau generated $33.5 billion in gaming revenue, making Las Vegas look like child’s play.
Source: Regulatory data.
Today, Las Vegas is to Macau what Atlantic City is to Las Vegas. And at the current rate of growth, Macau will soon generate four times as much gaming revenue as the old gaming capital of the world very soon.
What Happens in Macau Doesn’t Just Stay in Macau
An improving economy in China, along with development in other parts of Asia, has given an immense population more disposable money to gamble with. And gamble they do.
Mini Macaus are sprouting elsewhere in Asia. Singapore, which has just two casinos, is anticipating as much as $7 billion in gaming revenue in 2012, just three years after casinos opened there. The Philippines, Vietnam, and Japan are also looking to cash in on the trend.
If Las Vegas doesn’t watch out, it may slip to the third, fourth, or maybe even fifth gambling hot spot in the world in no time.
What’s Next for Las Vegas?
If Macau is the new gaming hot spot, what does that mean for Las Vegas? The glitz and glamor have worn off a bit, but the city has been on the mend since the economy started recovering. Visitors are coming back in droves, and even if they aren’t gambling like they used to, they’re willing to spend on rooms, shopping, pool parties, and bottle service at nightclubs.
But if Las Vegas doesn’t watch it, it could become the next Atlantic City. The gambling spot just south of New York on New Jersey’s coast may now be best known as a giant billboard for Donald Trump rather than a great place to gamble. The city’s casinos have become run-down and revenue has suffered as a result.
Las Vegas, it was a nice run on the top. But it looks like your luck is running out.
Motley Fool contributor Travis Hoium does not have a position in any company mentioned.
Tagged: Atlantic City, New Jersey, baccarat, China, Finance, gambling, gaming, high stakes, HighStakes, Las Vegas, Las Vegas Sands, LasVegas, LasVegasSands, macau, MGM Resorts, MgmResorts, Sands Macao,