MACAU VS OTHER GAMING MARKETS

Actually, Beijing’s interference is a major driver of the sharp sequential downturn in gaming revenues in Macau. While underlying casino demand declines across the globe, it is accelerating in Macau. However, Beijing controls the spigot. If you believe Beijing favors long term sustained growth for Macau, as I do, then Macau now appears to be a much better relative value than other gaming markets. Government interference in the US economy will do nothing to stem the negative trend in gaming revenues. Las Vegas faces a fundamental demand issue as consumers tighten, savings rates escalate, travel becomes more difficult and expensive, and the Strip pays the price for raising prices so much over the past few years.

Macau’s issues are short term and will likely get better next year at the latest. The Strip’s problems are structural and cyclical. Where would you rather invest?