LOS ANGELES (Reuters) - A new wave of investment is buoying Atlantic City, but the New Jersey gambling center long overshadowed by Las Vegas faces a new rival that puts a dampener on its success: the Chinese gambling enclave of Macau.
Two large casino companies -- Las Vegas Sands Corp. (LVS.N: Quote, Profile, Research, Stock Buzz) and Wynn Resorts Ltd. (WYNN.O: Quote, Profile, Research, Stock Buzz) -- have gone straight to Macau after opening their first casinos in Las Vegas, skipping the No. 2 U.S. gambling market.
Macau, which has had gambling for more than a century, has seen casino winnings jump in the past four years, including a 23 percent rise to $7 billion in 2006, when Atlantic City revenue rose 5 percent to $5.2 billion.
Macau last year even overtook the Las Vegas Strip's $6.69 billion of "gaming wins" and Wall Street is forecasting Macau casino revenue to grow to anywhere from $10 billion to $15 billion by 2010 -- a big greenlight for casino developers.
"There is a finite pool of developers in this business. They have a finite amount of capital at their disposal," Pinnacle Entertainment Inc. (PNK.N: Quote, Profile, Research, Stock Buzz) Chief Financial Officer Steve Cap said at the Reuters Hotels and Casinos Summit.
"There are only so many enormous projects any company wants to have on simultaneously."
Atlantic City is in better shape than it has been for years, however.
Cap plans to spend nearly $2 billion to build a new Atlantic City casino, and Pinnacle is not alone.
"You could hear the kind of groundswell of investment headed for Atlantic City at this point," Cap said. "Gaming across the globe is simply expanding as people become more familiar with it as an entertainment alternative."
But Macau is winning the battle for attention and resources of leading casino operators, such as Steve Wynn, who is credited with transforming Las Vegas over the past 20 years.
Many in the gambling industry expect Wynn to come to Atlantic City -- but he is not there yet. MGM Mirage Inc. (MGM.N: Quote, Profile, Research, Stock Buzz) has a joint venture in Atlantic City, but it also owns more than 70 acres that have been dormant for years.
Chief Executive Terrence Lanni told the Reuters summit in Los Angeles on Tuesday that MGM is mulling a multibillion-dollar development but would not break ground for at least two years -- if the company decides to go ahead.
Meanwhile, MGM is in a Macau joint-venture that will open its first property this year, and Lanni said the joint venture had acquired a second Macau site and is scouting for more.
"The flight of capital -- and this is not unique to gaming -- to Asia, is a problem that is going on with American business," James Perry, CEO of Trump Entertainment Resorts Inc., said in an interview last year.
"If that wasn't available to them, would they be saying, 'well, the next best opportunity is Atlantic City?'" he asked.
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