Curb on casinos may unsettle investors: analyst

Macau’s move to limit the growth of its gaming sector will create uncertainties and discourage investment in the gaming hub, gaming analyst Sean Monaghan said yesterday.
The government said earlier this week it would not approve any new casino projects and would allow only about 700 additional gambling tables in the next three years, as part of its effort to diversify the economy of the former Portuguese enclave.
Macau’s Economy and Finance Secretary Francis Tam said projects, which had not yet been approved had already been halted to promote “healthy” development of the gaming industry, which accounted for 70 percent of the city’s revenues.
However, gaming analyst Sean Monaghan said casinos were part-and-parcel of the overall development of the leisure and entertainment sector and should not be singled out.
“You can’t have this sort of caps unless you don’t want the mega projects to be built,” Monaghan, managing director of AG Leisure Partners, told AFP in Hong Kong.
He added there was still a lot of room for growth in the sector, considering the potential of the mainland Chinese market.
He said the new policy was very confusing and unsettling for potential investors in Macau, which has overtaken Las Vegas and Atlantic City combined in terms of casino revenues since it opened up the gaming sector in 2002.
Macau, the only Chinese city where casino gambling is legal, has about 4,770 gaming tables and six licensed casino operators, some of which still have projects under construction.
The Chinese government has urged Macau’s leaders to cool the city’s gambling industry growth after gaming revenues skyrocketed 66 percent in the first two months of this year, according to reports.
Concerns were that Macau would not be able to develop the non-gaming sectors and that mainland Chinese visitors would gamble away all their savings if casinos were allowed to continue to expand.
But brokerage CLSA remained upbeat about the sector, giving a forecast of 30 percent growth in revenues for 2010.
“With supply expanding very slowly, we expect the industry to deliver above average returns for the next few years,” said Aaron Fischer, CLSA’s analyst for Macau and Singapore.
Fischer believed that the potential contraction in liquidity growth in China would not affect consumer lending, which is the segment that is making its way into Macau.