HONG KONG, CHINA - MACAU has announced a freeze on new gaming licences and land allocations for new casinos in a bid to rein in the industry's breakneck growth.
Chief Executive Edmund Ho said the new policies would not affect casinos under construction or already approved by the government.
He added that he was following Beijing's directives on the industry and did not specify when the freeze on new licences or development would be lifted.
While Macau's casinos have energised the enclave's once sleepy economy, the boom has had a darker side, spawning anti-government protests against a growing wealth gap and perceptions of endemic graft.
In January, former official Ao Man Long was jailed for 27 years for a litany of graft charges, including accepting kickbacks to speed up the construction of casinos.
Many also protested that the casino boom had not benefited the wider society and that much of the profits has gone to foreign operators.
'Rampant growth in the gaming industry has been crowding out resources which could be allocated to the expansion of other sectors of the economy,' wrote economist Enoch Fung.
Macau currently has given out three casino licences and three casino sub-licences which allow a total of six companies to operate 29 casinos in the city.
Last week, it announced that gaming revenues in the first three months of this year had risen to 30.1 billion patacas (S$5 billion) - about the same as the amount it took in for the whole of 2003.
Revenues last year topped US$10 billion (S$13.5 billion) for the first time, far outstripping Las Vegas' Strip and just shy of the wider Las Vegas area.
There are currently more than 4,300 gaming tables in Macau, compared to 424 tables in 2003, Gaming Inspection and Coordination Bureau statistics show.
But daily revenue per gaming table in Macau has dropped to under US$12,000 from US$22,000 in 2002, when a four-decade monopoly by casino mogul Stanley Ho expired.
'The Macau government is sensing there's too much supply of new casinos,' said Mr Brian Cheung, chairman of Hong Kong-listed A-Max Holdings.
'Some casinos are starting to have problems drawing gamblers. I won't be surprised to see them closing or scaling down in the near future.'
A-Max runs junkets or group tours of gamblers who each bet at least 1 million patacas a trip.
UBS analyst Grant Chum noted that the Macau government, which also said on Tuesday that it would try to regulate VIP junket commissions, could act again to control gaming.
Macau hopes its restrictions will encourage more investment by casino firms in non-gaming activities, such as retail and conventions. Such activities account for about 20 per cent of revenue for operators in Macau, against 60 per cent in Las Vegas.
The major casino players that have yet to wade into Macau's increasingly cut-throat market are Harrah's Entertainment, which owns a golf course in the territory, Kerzner International Holdings and Malaysia's Genting.
Sir Richard Branson's Virgin Group was interested in building a casino, according to media reports last year.
These players could still make a foray into Macau but they would have to forge joint ventures with incumbent casino players or buy them out.
Downside to gaming boom
THE number of gaming tables in Macau has grown 10 times to more than 4,300 since 2003.
While total revenues last year topped US$10 billion (S$13.5 billion) for the first time, daily revenue per gaming table has dropped to under US$12,000 from US$22,000 in 2002, when foreign casino operators were allowed in.
The casino boom has created a labour shortage in other industries as casinos offer higher pay and better benefits. It has also led to an influx of illegal workers.
Many residents have protested that the casino boom has contributed to a growing wealth gap.
AGENCE FRANCE-PRESSE, REUTERS, BLOOMBERG