Are We Now Chasing Macau?

Casino regulators in Macau recently disclosed just how much money the Chinese Special Administrative Region’s 35 casinos made from gambling in 2012: about $38 billion, a 13.5 percent increase over the previous year’s $33.5 billion.

To put that into context, in 2011 (we don’t have 2012 totals yet), Nevada’s 340 casinos raked in $10.7 billion from their gaming tables and slot machines. At this rate, in 2014 the state’s gaming revenues will be about one-fourth of Macau’s.

What makes that a bit galling is that 2012 was considered an off year for Macau, particularly in July, when monthly gaming revenues only increased by 1.5 percent. It would be hard for Macau to match 2011’s 42 percent gain over 2010, but with double-digit annual growth nowhere in sight in Las Vegas, it’s hard to feel sorry for a city with “only” a 13.5 percent growth rate.

Of course, the bigger question is whether Macau’s accession really is at an end. The rate of growth has fallen since 2010 and, as with the market for high-end play in Las Vegas casinos, few analysts ever believed that Macau would grow indefinitely. But even if it settles down to be a steady $40 billion annual market, most operators would jump at the chance to invest billions to get in on the action. Is it possible that Macau took only a decade to go from upstart to maturity, a process that took Las Vegas 30 years? It certainly looks that way.

For Las Vegas, the lesson is that, barring massive global geopolitical and economic disturbances or a Beijing clampdown on Macau’s casinos, it is unlikely that Las Vegas will ever again be the world’s leading gaming destination. But it’s also a reminder that every boom has its limit; it’s easy to prosper while surfing the initial growth wave, but real character is revealed once dollars (or patacas) are a little harder to come by.