LOS ANGELES (Reuters) - Leading U.S. casino companies are increasingly looking overseas as domestic growth slows, with the Chinese gambling resort of Macau emerging as the biggest potential expansion engine.
Operators from Las Vegas Sands Corp. (LVS.N: Quote, Profile, Research, Stock Buzz) to Kerzner International KZL.N are investing heavily in foreign markets including Singapore, with Macau taking the limelight as a destination which could soon rival Las Vegas in size.
"In general there's more growth outside the U.S. than inside the U.S. in terms of new or expanded markets," said Joe Greff, an analyst with Bear Stearns & Co. at the Reuters Hotels and Casinos Summit in Los Angeles.
Las Vegas and Atlantic City, New Jersey, the two main U.S. gambling resorts, are both forecast to grow slightly faster than U.S. gross domestic product over the next few years, said William Schmitt, an analyst at CIBC World markets.
Macau, meanwhile, is expected to grow at a compound annual growth rate of 15 percent from 2004 to 2010, when the market could total $13 billion a year, he said.
That is more than double the $6 billion that Las Vegas Strip casinos won from gamblers last year. Currently the Macau market is slightly smaller at about $5 billion.
Another investment bank, Jefferies & Co., projects that the Macau gaming market could hit $12.9 billion in 2008, and later grow to $15 to $16 billion, bolstered by high-end projects in a market that currently focuses on day-trippers, and new ferry, rail and bridge infrastructure that will boost access from nearby Hong Kong.
Within the U.S., meanwhile, state laws have restricted the potential for casino developments to a few choice markets such as Pennsylvania, whose government is licensing operators to build slot machine-only casinos at select locations.
Las Vegas Sands, which was the first U.S. operator to open in Macau, reported on Tuesday that its fourth-quarter casino revenue there rose 61.3 percent to $270 million, adding that China planned to raise the number of mainlanders eligible for visas to visit the island resort.
"These kinds of metrics continue to support the bullish outlook for Macau and justify our investment there," Las Vegas Sands President and Chief Operating Officer William Weidner told analysts.
MGM Mirage Inc. (MGM.N: Quote, Profile, Research, Stock Buzz), the world's second-largest gambling company, and Wynn Resorts Ltd. (WYNN.O: Quote, Profile, Research, Stock Buzz) are both also opening casinos in Macau.
In Singapore, which last year lifted a ban on casinos in order to boost tourism and create more jobs in the services sector, four consortia are bidding for the first of two planned casino resorts.
MGM Mirage Chief Executive Terry Lanni and Gary Loveman, his counterpoint at Harrah's Entertainment Inc. HET.N, the world's largest gaming company, estimated bids in Singapore at between $2.5 billion and $3.5 billion and $2 billion to $3 billion, respectively.
Lanni told Reuters that MGM, together with local partner CapitaLand, has a good chance of winning authorities' backing because it "would be a catalyst for other development."
That could be just the beginning. Continued...
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