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Macao report: the world’s most important gaming center

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Your faithful correspondent was in Macao this weekend, and I'm happy to relay my observations of the world's new gaming capital.

  • [caption align="alignright" caption="Opulence and ostentation remain the name of the game in Macao"] [/caption]As has been discussed previously, the epicenter of gaming in Macao has shifted from the Peninsula to the Cotai Strip. Given the relative levels of crowds in respective casinos, this trend appears to remain intact. However, this alone is not reason to short Wynn ( quote ) as the casino generates substantial income from high rollers that are far less visible than their mass market counterparts.

  • According to a manager at Melco Crown Entertainment ( MPEL , quote ), there is unofficial confirmation that the Studio City Project will indeed resume construction in the very near future. This is bullish for the Australian-Hong Kong joint venture as this will increase their exposure to the very lucrative Cotai Strip.

  • Although the Sands Cotai Central is only partially opened, the number of gamers there was rather disappointing for any Las Vegas Sands ( LVS , quote ) investor. Of course, this is no reason to dismiss the stock entirely. However, the few gamblers at the complex belied the lack of palpable enthusiasm that punters in the Pearl River Delta have for the Sands Cotai Central. Once the complex is fully open, perhaps gamers will be more enthused.

  • That being said, Sands' landmark Venetian property remains the go-to destination for mass market gamblers in Macao.

  • The recent gangland-style attack of an executive in Macao has not had a discernible effect on attitudes in the city. The Special Administrative region struggled in the eighties and nineties as the result of excessive Triad influence that haunted the city. While such a development is unfortunate, few think that this marks a return to the gang violence of decades past.

  • We've commented before that gaming growth in Macao has slowed in recent months. While this is indeed problematic, this is largely a product of high-end gaming growth slowing. While the high-end segment is easily the most important, once the global economy returns to health, the former Portuguese enclave will likely see a return to high-end growth. Importantly, the destination remains immensely popular amongst Mainland Chinese citizens, in addition to neighboring Taiwanese, Korean, Japanese, and Hong Konger gambling enthusiasts.

Disclosure: Author and family are long all stocks mentioned in this article.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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