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Macau casino revenues eclipse Las Vegas Strip resorts
By BRENDAN RILEY
26 May 2006

STATELINE, Nev. (AP) - Macau has been described as Asia's Las Vegas, but a researcher says that in terms of casino revenue -- both reported and unreported -- the former Portuguese colony's clubs have eclipsed Las Vegas Strip earnings.

Merrill Lynch casino analyst Sean Monaghan, speaking at the 13th International Conference on Gambling and Risk-Taking which ended Friday, said the reported $5.6 billion in revenue for Macau casinos has been compared to a similar win by Strip resorts in fiscal 2005.

But there's "a significant underreporting of actual revenue of the market" in Macau, Monaghan said, adding that the incentive for that is a Macau tax rate of 40 percent.

"So people think $5.6 billion is almost as big as the Las Vegas Strip and all that," said the Singapore-based analyst. "It's probably $2 billion -- at least -- bigger than that."

"It's probably incontestable, it could be corrupt money," Monaghan said in discussing what he termed unreported "funny money."

Part of the underreporting stems from increased competition among junket operators who handle VIP players, Monaghan said. But he added there's a "massive" slowdown in VIP play in Macau that reflects a Chinese government crackdown on "certain people going there and spending money they shouldn't have had."

Ricardo Siu of the University of Macau said new government regulations and pressure from outside investors are helping to change the way gambling has been run there for decades. But Siu said change is slow given the influence of long-entrenched interests.

Tracking large sums of money, to guard against money-laundering by players, isn't always easy given a strong desire of Chinese high-rollers for confidentiality, added Wu Yi Wang of the Macau Polytechnic Institute.

But he said the confidentiality concern isn't as great among newly affluent gamblers from mainland China, which produces 90 percent of Macau's players, as it is among longtime gamblers.

Macau's economy has been booming, driven by liberalized gambling rules and relaxed travel restrictions. The tiny island, about 40 miles west of Hong Kong, was returned to Chinese sovereignty in 1999 after more than four centuries of Portuguese control. As a special administrative region of China, Macau has economic and legal autonomy.

The local government ended a four-decade monopoly held by local billionaire Stanley Ho in 2002, and new investors since then have included Las Vegas Sands, Wynn Resorts and MGM Mirage.

Also, Melco International Development Ltd. is involved in a joint Macau casino venture with Australian partner Publishing & Broadcasting Ltd. PBL is led by James Packer, and Melco is backed by Lawrence Ho, son of Stanley Ho.

Monaghan said the Macau boom is part of a "decade of massive change in Asia." He said the growth should continue in Singapore, Thailand and Japan, adding, "The whole world is looking at Asia, particularly after the success of Macau."
 
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