AusLeisure

Gambling revenue in Macau rose 35% in January from a year earlier, according to statistics from the Macau SAR Government, as players from mainland China continued to fuel growth.

However, the outlook for the rest of the year is apparently gloomy amid uncertainty over the sustained interest of high-rollers.

Macau, the only place in China where casino gambling is legal, saw gambling revenue rise to 25.04 billion patacas ($3.13 billion) in January, up from 18.57 billion patacas a year earlier, according to data from Macau's Gaming Inspection and Coordination Bureau.

The figure was bolstered by the weeklong Lunar New Year holiday but fell short of the all-time monthly high of 26.85 billion patacas hit in October.

The Chinese territory remains the largest gambling centre in the world. Last year it raked in more than five times the gambling revenue analysts estimate the Las Vegas Strip earned.

Macau's revenue growth has been explosive since the end of 2009 as players have continued to place bets regardless of China's monetary tightening measures and Macau government efforts to slow growth to a more measured pace. But analysts have a less bullish outlook for 2012.

Wells Fargo analyst Cameron McKnight is one of the most bearish with a forecast for 11% gambling revenue growth this year compared with last year's blistering 42% rise.

Investors are particularly concerned about whether the fierce growth in VIP gambling, which accounts for nearly 75% of all gambling revenue in Macau, is sustainable. The VIP market is driven by junket operators, which bring high-spending gamblers to the casinos, issue them credit and collect debts in exchange for commissions. Since gambling debt isn't recognised in China, there are no legal means for casinos to recover debts owed to them by Chinese players.

However, despite similar concerns raised by analysts and investors the past two years, Macau's revenue growth has managed to exceed expectations.

CIMB banking group analyst Teng Yee Tan explains "the year-on-year comparison forecasts are becoming more and more challenging for us", but he is currently forecasting 15% to 18% growth for 2012.

Shares of casino operators continue to outperform other listed stocks in Hong Kong with Galaxy Entertainment Group Ltd., which opened its flagship Galaxy Macau casino in May, up 21% year to date at 17.22 Hong Kong dollars (US$2.22). Shares of Sands China Ltd., the Macau unit of Las Vegas Sands Corp. set to open a massive expansion project this year, have also risen 21% to HK$26.45. Hong Kong's benchmark Hang Seng Index has risen 10% so far this year. 

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