Thursday, March 25, 2010

A Pilgrimage to China's Casino Mecca

By Eric Jackson
RealMoney Contributor

3/24/2010 5:00 PM EDT
Click here for more stories by Eric Jackson

I traveled to Macau recently to see how the Las Vegas of the Orient was faring. We've heard endlessly about the potential of Macau, but it's difficult to appreciate until you go there and see it first-hand. My take-away: Macau is working, and stocks associated with it should do well in the years ahead.

This small island at the mouth of the Pearl River is overrun with visitors at the moment. They're coming across the border from China by the busload, or from Hong Kong on high-speed ferries.

Macau was turned into a casino Mecca in the 1960s by Stanley Ho, who held a monopoly for many years and still controls a Hong Kong-listed company, Sociedade de Jogos de Macau, that owns two large casinos here: Lisboa and the newer Grand Lisboa. Both were packed earlier this week with chain-smoking mainlanders gambling midday on a weekday. The clientele appeared a little more lowbrow compared with those at other casinos I visited, but they seemed very happy with their experience from what I saw.

Stanley Ho's daughter, Pansy Ho, entered a joint venture with MGM (MGM - commentary - Trade Now) a few years ago to open an MGM Grand in Macau. During my visit, it seemed the least busy of all the new American casinos in this former Portuguese territory, which reverted to Chinese sovereignty in 1999.

Stanley Ho's son, Lawrence Ho, runs Melco Entertainment (MPEL - commentary - Trade Now), which operates City of Dreams over on the Cotai Strip (one island over from the main island of Macau). City of Dreams, though newer and nicer, wasn't as busy as Stanley Ho's casinos, either.

Wynn Resorts' (WYNN - commentary - Trade Now) casino is extravagant and exactly like the experience you have when you go to Las Vegas. The hotel is one of only three in Asia to receive the coveted Mobil 5 stars. Visitors pass countless high-end shops on their way to the casino floor. However, I was surprised to see relatively low traffic, compared with other casinos I visited. There were noticeably fewer mainland Chinese and more Australians and Hong Kong visitors. When asked, a local denied mainlanders had any bias against Wynn, saying they often returned to the casinos they liked, and "word of mouth" was very important to draw more customers to certain casinos.


[This post is an excerpt of the full article, available by clicking here to go to Note: subscription required.]

Sphere: Related Content
blog comments powered by Disqus