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ALI FARHOOMAND

MACAU GAMING REVENUES ARE OUT OF SIGHT

From scattered fantan1 stalls to gambling houses, and exclusive concessions to multinational licence holders, Macau's gaming industry has experienced distinct stages of evolution since it was first legalised in 1847. By liberalising gaming ownership and granting exclusive licences to three bidders in 2002, the government of the Special Administrative Region (SAR) of Macau introduced competition and injected verve into what had become a stale monopoly. Casino magnates from Hong Kong, the US and Australia are leading the gaming industry with irrepressible momentum towards growth. Macau's proximity to more than a billion people in developing China makes it a tempting prospect for international casino owners, casino operators, junkets2 and public investors alike. As companies compete for market share, consumers (including gamblers, convention goers and tourists) will be able to choose from a greater variety of mass-market games, shows and entertainment, and hotels and restaurants. Perhaps the biggest winner in the industry will continue to be the Macau government, whose coffers receive almost 40% of the net wins.3 Macau residents have already benefited indirectly from a reduction in personal income tax, and an increase in welfare benefits and salaries of civil servants. Today Macau boasts more glitz, diversity and potential than ever before, and observers are touting it as the "Las Vegas of Asia", foreshadowing what appears to be inevitable success for the gaming industry. Deutsche Bank predicts that Macau's gaming revenues for 2005 will top those of the Las Vegas Strip. It also expects "gaming revenues to increase at an average rate of almost 20% over the next four years and reach almost US$10 billion by 2008", which exceeds the US$9 billion that all the casinos in the state of Nevada bring in each year.4 If predictions hold true, Macau will soon enter a new phase as it overtakes Las Vegas and becomes the pre-eminent gaming spot in the world.
1 Fantan is a Chinese game of chance where a random number of counters are placed under a bowl and players have to guess how many are left (0, 1, 2, or 3).
2 Gaming junket is an arrangement for the promotion or organizing of gaming in one or more casinos.
3 Net wins refer to the "Drop" (the total amount of money, or accepted equivalent such as chips and tokens, wagered) minus "Payout" (amount of money, or accepted equivalent, distributed to a patron as a result of a legitimate wager).
4 Falcone, Marc, Deutsche Bank Securities Inc. (2005) "Gaming Industry Additional Insights on Macau Gaming and MGG/MBG", [www document] http://web7.infotrac.galegroup.com/itw/infomark/529/95/72573139w7/ (accessed July 8th 2005).
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