Despite tripling revenues in 2006, Hong Kong-based Galaxy Entertainment Group posted a US$193 million loss for the year. In 2005 the company made a profit of US$307.2 million but last year its new casinos in Macau and high interest costs, plus depreciation of its gaming licence, turned profit to loss. The Galaxy StarWorld Casino, which was opened last October, took the company’s gaming share to 22% of the Macau market and Galaxy intends to increase that share to 25% by the end of 2007.

Macau’s economy continues its rapid growth but its future success may depend on non-gambling elements. The new casino resorts on the Cotai Strip are draining the labour market and the Macau government has yet to relax its immigration policies. There is the added risk that the slow progress of infrastructure projects, seemingly taking a back seat to casino development, will ultimately have a detrimental effect on growth. Should the Chinese government take decided action over corruption, the source of some gambling revenue would also disappear.

At present the remarkable gaming revenue figures from Macau, up 22% to US$6.9 billion in 2006 and outstripping the Las Vegas Strip, rely mostly on tourists from Mainland China. This is expected to continue in the short term but Macau will have to diversify much as Las Vegas did. As Reuters reported, one businessman thought that "Macau is attracting people from the Chinese mainland who think they'll get rich by gambling. But in five to 10 years they'll know the risk of losing."

Billions of dollars are being bet that Macau will maintain its position as Asia’s gambling mecca, and future competition from other Asian countries is so far being shrugged off by the developers. The huge casinos on the Cotai Strip will offer far more than just gambling - amusement parks, retail outlets and convention centres are all designed to turn Macau into the Las Vegas of the East. It remains to be seen whether the glittering attractions retain their lustre in the long term. (E-04.18.07)

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