NEW YORK, NY -- (Marketwire) -- 02/14/12 -- Casino operators have performed well in the early stages of 2012 as the Macau gaming market continues to grow. "Better infrastructure is drawing more Chinese tourists to Macau, benefiting the whole industry," Gary Pinge, an analyst at Macquarie Securities Ltd. told Bloomberg. Presently, the Market Vectors Gaming ETF -- which seeks to replicate as closely as possible an index consisting of publicly traded companies engaged in the global gaming industry -- is presently up more than 10 percent year to date. Five Star Equities examines the outlook for the Resorts and Casinos Industry and provides equity research on Melco Crown Entertainment Ltd. (NASDAQ: MPEL) and MGM Resorts International (NYSE: MGM). Access to the full company reports can be found at:
Earlier this month Macau's Gaming Inspection and Coordination Bureau reported that gambling revenue in Macau, the world's largest gambling destination, jumped 34.8 percent in January to 25 billion patacas ($3.13 billion), boosted by a record flow of Chinese visitors during the Lunar New Year holiday. The tiny island remains the largest gambling center in the world. Last year Macau generated more than five times the gambling revenue analysts estimate the Las Vegas Strip earned.
Despite the strong start to 2012, analysts warn Macau's growth could slow this year, pricing in a slowdown in growth from 42 percent in 2011 to 11-20 percent in 2012, Reuters says. Wells Fargo analyst Cameron McKnight goes as far as to forecast 11 percent gambling revenue growth this year compared with last year's impressive 42 percent upswing.
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According to a recent article from Reuters, Macau's government is looking to reduce its reliance on high roller VIP players, who accrue more than 80 percent of gaming revenues yet make up a fraction of the millions of people flocking to the region's casinos.
A recent article from The Wall Street Journal explains that the VIP market is driven by "junket operators" -- which bring high-spending gamblers to the casinos, issue them credit and collect debts in exchange for commissions. "Since gambling debt isn't recognized in China, there are no legal means for casinos to recover debts owed to them by Chinese players," The Wall Street Journal argues.
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