* Year-on-year growth beats expectations
* Revenues supported by holiday in China
* Outlook overshadowed by slowing Chinese economy
By Farah Master
HONG KONG, Nov 1 (Reuters) - Gambling revenue in Macau rose a better-than-expected 3.2 percent in October year-on-year, buoyed by a week-long holiday in China that enabled cash-rich mainland gamblers to bet in the world’s largest casino market.
October’s revenue of 27.7 billion patacas ($3.5 billion) was the strongest monthly figure so far this year. Analysts had forecast growth in the tiny enclave on China’s southern coast to be up around 2 percent during the month.
While the data could provide a short-term boost for the market, the outlook is still overshadowed by slowing economic growth in China that could weigh on revenues going forward.
The former Portuguese colony, one hour from Hong Kong by ferry, is the only place in China where people can legally gamble at casinos.
Slower economic growth in China and heightened political scrutiny as the country prepares for a generational power shift have kept many wealthy Chinese gamblers away from Macau’s baccarat tables.
Spending by China’s expanding middle class has kept overall gambling revenues from dropping significantly, but growth rates have fallen substantially over the past six months.
Macau’s economy, one of the world’s fastest growing last year, is heavily dependent on the casino industry. The sector contributes around 40 percent of gross domestic product.
Visitor levels have continued to trend downwards with September registering a 0.2 percent year-on-year decline, magnifying competitive pressure among the six casino operators, including Las Vegas operator Steve Wynn through his unit Wynn Macau.
In October, the Macau government approved land concession contracts for the Chinese arm of MGM Resorts, MGM China , and local player SJM Holdings. A swathe of new casino resorts is set to open starting in 2015.
China’s National Congress of the Communist Party starting Nov. 8, where China’s new political leaders will be appointed, may help create more certainty for Macau’s VIP market, said Gabriel Chan, director at Credit Suisse in Hong Kong.
Junkets — companies that advance credit to wealthy gamblers and help them circumvent currency controls — had cut the amount of credit issued to gamblers due to delays in recouping loans and sluggish demand from gamblers.
Chan said junkets may now feel more confident to resume lending after the political transition is complete.
Improved transport links from the mainland to Macau, which lies along China’s Pearl River Delta, will also help bring in visitors once new rail extensions are complete starting early next year.