UPDATE: Macau's December Gambling Revenue Soars 66% On Year

Macau's gambling revenue in December surged 66% from a year earlier, capping a year in which the territory's revenue from casino gambling soared 58%, well above forecasts made by analysts and officials earlier in 2010.

The huge increase in gambling revenue came despite Beijing and Macau officials urging the city to diversify its economy away from the lucrative casino business and apparent efforts by the government to tame the industry's growth.

Gambling revenue in December totaled MOP18.88 billion (US$2.36 billion), up sharply from MOP11.35 billion a year earlier, according to data from Macau's Gaming Inspection and Coordination Bureau.

Macau's full-year 2010 gambling revenue rose to MOP188.34 billion from MOP119.37 billion in 2009, when the city was hit by the global economic downturn, a swine flu outbreak and mainland China visa restrictions in the first half of the year.

December's figure was higher than the MOP17 billion-MOP17.5 billion that JP Morgan analyst Kenneth Fong had said analysts expected for the month.

Fong said earlier that December's figure could match or exceed October's record level of MOP18.87 billion. Market estimates of a 20% rise in 2011 gambling revenue appear "too conservative," he added.

Ambrose So, chief executive of Macau's largest casino operator by revenue, SJM Holdings Ltd. (0880.HK), forecast in March that Macau's casino gambling revenue would rise just 13%-15% in 2010.

In March, the Macau government said it would put a cap on the number of gambling tables in the territory, complicating casino operators' expansion plans.

In addition, the local government's tight restrictions on foreign labor has stalled the development of Sands China Ltd.'s (1928.HK) massive casino expansion project in the Cotai area. The company had aimed for the expansion to be operational in the third quarter of 2011, but analysts now expect a mid-2012 launch at best.

In December, the government rejected applications from both Sands China and SJM Holdings to develop another site in Cotai, saying their plans to build casinos on the land didn't exempt them from a public tender.

The unprecedented move came after the government reiterated it wouldn't approve new casino projects submitted after 2008, and also said it would no longer grant land for casino projects without a public tender once a new Land Law comes into effect.

But as the new land law, which the government started revising in 2008, isn't likely to come into effect until 2012, analysts say they don't expect it to affect the land grants for new casino projects in Cotai planned by SJM Holdings Ltd. (0880.HK), Wynn Macau Ltd. (1128.HK) and MGM Macau, expected to be awarded in early 2011.

-By Kate O'Keeffe and Chester Yung, Dow Jones Newswires; 852-2802-7002; [e-mail]