UPDATE 1-Macau stocks slide as slowdown, travel curbs weigh

(Adds details, analysts' comment, share action)

By Jun Ebias and James Pomfret

HONG KONG, Oct 6 (Reuters) - Shares in Macau gambling stocks slid on Monday as investors feared Chinese restrictions on travel may dent the gaming haven's three-year casino boom, boding ill also for global operators such as the Las Vegas Sands (LVS.N).

Analysts said the latest restriction on visas for Chinese travellers, which limited visits by residents of the country's south, was smothering the former Portugese colony's major source of revenue and may mean even stricter curbs are in the offing.

Local newspapers reported gaming revenues fell 3.4 percent to 6.9 billion patacas ($860 million) in September from a year ago, the first annual drop since January 2006, while analysts reckoned they declined 3 percent. The Macau government declined comment.

Shares in casino operator Galaxy (0027.HK) slid 11 percent, while Shun Tak (0242.HK), which operates a ferry between Hong Kong and Macau, slid 13 percent, far worse than the market's 4 percent loss.

"There are concerns that more visa restrictions that are more severe than the previous ones will be implemented," said Gabriel Chan, an analyst at Credit Suisse.

"The restrictions are damaging the sector. According to estimates, gaming revenue is down 3 to 5 percent in September."

Falling stock markets, slowing economic growth and worries about financing are hounding the worldwide gaming sector.

But investors also fear a weakening in Macau after years of unprecedented growth, because of travel restrictions meant to curb money laundering and illegal activity.

In April, Macau halted the issue of new casino licences and imposed a land freeze on the building of new casinos, in what analysts interpreted as a bid by Beijing to rein in its excesses amid growing social tensions and perceptions of endemic graft.

Now, fierce competition, a casino glut, and wafer-thin margins eaten away by powerful VIP gambling operators are all taking a toll on casino earnings, analysts say.

The latest restriction, which took effect on Oct 1, limits Guangdong residents to one Macau visit every three months, instead of every two months previously, according to local and state media reports. Residents of the affluent province account for a large number of visitors to the only city in China where gambling is legal.

MAJOR HIT

The world's biggest gaming companies have major footprints there, including Sands -- which raked in operating income there of over $120 million in the second quarter while making an overall net loss -- the MGM Mirage (MGM.N) and Wynn Resorts (WYNN.O).

A slowdown there will hit hard at a time they are struggling with a slowing Vegas market as a slowing economy begins to bite.