estrictions imposed by China on mainland tourists have progressively reduced the number of visitors to Macau, the only place in Chinese where casinos are legal. Since September 1, Chinese traveling to Hong Kong have had to apply for a separate permit to enter Macau.
“The impact of the visa restriction is clearly beginning to show," Billy Ng, a Hong Kong-based analyst at JP Morgan & Chase Co., said in a phone interview. “External economic factors are also taking their toll. Things may get even worse next year as more casinos open and competition intensifies further."
Quarterly casino revenue fell for the first time since the end of 2005 in the second quarter. Revenue from so-called VIP gambling, more than 67 % of total casino revenue last year, fell for a more-than-average 14 % to us$ 2.1 billion.
Macau’s gambling revenue began surging in 2004, when the city’s first foreign-owned resort opened after the government ended a legal monopoly on casinos. The number of casinos has since more than doubled to 31.
Foreign operators including Las Vegas Sands Corp. and Wynn Resorts Ltd. are investing at least us$ 25 billion in Macau. Sands, controlled by billionaire Sheldon Adelson, is planning at least nine more hotels on a strip anchored by its Venetian Macao resort.
“The rest of 2008 will remain depressed as the effects of the series of government measurers accumulate," Karen Tang, a Hong Kong-based analyst at Deutsche Bank, wrote in a report issued October 6. The bank cut its 2008 industry growth forecast to 35 % from 40 %, according to the report.