Strict regulations in Macau attracting Chinese tourists to Las Vegas

Revenue for Las Vegas Sands and other Macau-centric casinos collectively fell 3.6 percent in July to USD 3.5 billion, Macau officials said recently. The fall was led by a slide in high-roller VIP gaming. Telsey Advisory Group analyst Chris Jones said Monday that Macau's mass-market segment — tourists and casual middle-class visitors - is also losing steam. And Las Vegas is picking up the slack. "We believe we are starting to see people relocate their gaming dollars" from Macau to Las Vegas, Jones told IBD. "That's largely been brought on by the government crackdown" on money laundering.

The trouble in Macau has hurt Las Vegas Sands, MGM Resorts International , Wynn Resorts and others with Macau casinos. But MGM has Vegas' biggest geographic footprint, operating casinos on 742 acres, says a recent Union Gaming Group report. So MGM could be a winner in a Vegas boom. In contrast, Wynn's resorts cover 240 acres and Sands' just 82, the report said.

Sands sports a 57 IBD Composite Rating, down sharply from a best-possible 99 on January 6. MGM scores a 54 and Wynn a 78. 

Analysts have been warning for months of a summer slowdown in Macau VIP gaming after officials arrested several local lenders on charges of illegal money laundering. Gamblers, especially VIPs, often take legal loans to skirt Macau limits on the amount of cash that can be brought to the district. However, Jones said that he noticed a broader shift toward Vegas early this year. "Typically we see a spike in Las Vegas gambling ahead of the Chinese New Year (January 24 this year), in November, December and January. This year, the momentum never slowed down after the holidays," Jones said.

Also, he said, Las Vegas has a more favorable tax rate than Macau. And U.S. gamblers don't have to go through the hassle of repatriating cash won in Las Vegas, like they do with Macau winnings. "One thing about Las Vegas that isn't talked about a lot is that it's easier to get a visa to travel from China to the U.S. than in the past," Jones said.

Jones sees Macau's hot growth rate cooling permanently because "it's getting to be a more challenging comparison. Macau mass market revenue can't grow at a 35% rate (as in recent years) in perpetuity." But like other analysts, he also expects Macau to retain its No. 1 spot after the region absorbs the impact of the crackdown. "We don't think you will see Vegas become the ultimate place to go," he said.