Las Vegas Casinos Profit from Macau’s Internal Problems

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As Macau faces allegations of corruption and other irregularities, Las Vegas casinos have stepped in the picture to handle big spending gamblers.

Las Vegas used to be considered the Gambling Mecca for decades until Macau stepped onto the scene to steal the spotlight. For over a decade, Macau has shown impressive financial reports and Las Vegas could not keep up with the Special Administrative Region. All of the high-rollers know that Macau is the place to go if you want to gamble.

However, recently Macau has been probed by the government over allegations surrounding corruption and extravagance. This has led to a shift in the gaming sphere, and casinos in Las Vegas and some other Asian countries saw the opportunity to welcome gamblers with open arms, according to reports by mobile casinos.

VIP gamblers ready to play elsewhere

• Chinese gamblers see playing refuge in Las Vegas casinos

• Baccarat among the most popular games for Chinese gamblers

• Macau will be back on its feet in six to nine months

Players from Chine have chosen to travel to US gambling Mecca in search of normal playing time. Additionally, some casinos in Manila, Philippines and even Australia’s Melbourne, are fighting over Chinese VIPs that don’t want to travel too long to gamble.

Macau serves as the single place in China where players can come and play in casinos without any fear of breaking any laws. But recently the government has been on an anti-graft crackdown mission, shutting down illegal gambling joints. Throughout the past three months Macau’s revenues has suffered quite a bit as result of decreased gaming activity.

Both MGM Resorts International (biggest operator of casinos on the Las Vegas Strip) and Wynn Resorts Ltd. have released financial statements that have surprised gaming analysts. The aforementioned casinos are known to boast among the best US poker rooms, slots and other fun gaming pursuits available to all customers that visit.

However, the results show that the game of Baccarat has experienced a surge in recent times in the respective casinos. Chinese gamblers often prefer this game to any other, but with the developments in Macau they were forced to change their playing destinations as well.

Praveen Choudhary, a Morgan Stanley analyst in Hong Kong, commented that current affairs in Macau has forced Chinese gamblers to seek other opportunities, “Since the scrutiny has intensified, gamblers are instead spending time away from Macau. Rich and famous gamblers are lying low and junkets have turned cautious in extending credit to worthy people.”

Macau still tops the gaming charts

The revenue that Las Vegas Strip casinos have managed to gain saw figures jump to an impressive $3.7 billion in the year to end-July. This represents an increase of 3.7%, while the main reason behind the recent success is due to baccarat, which went up 14.4% in revenue figures, according to gambling news.

Robert Shore, an analyst at Union Gaming Group based in Las Vegas, stated that this highlights “an inverse correlation” compared to the disappointing performance set high-rollers in Macau. Chief financial officer of MGM, Dan D’Arrigo, asserted, “Las Vegas is a brand that is clearly world-renowned and that people continuously want to come to.”

Despite suffering from recent developments and seeing their revenues slightly dented, Macau still commands the biggest revenues in the gaming industry. It generated a staggering $45.2 billion in casino revenues for the city in 2013, which is seven times more than what Las Vegas Strip is able to generate and remains more than the $36.5 billion for US as a whole.

Current estimates predict that revenues that come from Chinese VIPs are still going rise in the imminent future, but will have to wait for that for another six to nine months. Morgan Stanley’s Choudhary stressed, “The impact on Macau gaming lagged the decline of other industries like lodging, food and beverage, events and luxury retail.”

Choudhary also indicated that Chinese hotel growth suffered immediate effects as the Chinese government started the anti-extravagance campaign in late 2012 that hurt many developments. However, many analyst believe that once the situation in Macau is resolved, the city will once again be able to attract players of the highest caliber.

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