MACAO: A Hong Kong property investment company, which recently bought the three-star Hotel Taipa Macau (HTM), was still undecided whether to operate a casino in the hotel, which re-opened last Saturday.

The hesitation shown by Magnificent Estates, the new owner of the hotel, reflects the current situation in Macao's gaming industry - the intense competition is putting smaller casinos at a disadvantage.

Some academics have already predicted that the rapid development of the gambling industry and the emergence of more large-scale casinos will ultimately result in the elimination of smaller ones.

Magnificent Estates acquired HTM, together with its shopping mall, for 242 million pataca. There are more than 2,000 square feet of floor space on the ground and first floors of the hotel that could be used for gambling.

Liana Lam, HTM's assistant director of sales and marketing, said the decision on the casino rests with the hotel owner, and she had not yet heard anything on it. She admitted that competition is getting increasingly keen as more casinos are opening.

In fact, it has become a trend in Macao to operate casinos in hotels. Twelve of the 15 casinos run by Sociedade de Jogos de Macau, for instance, are located in hotels. And all newly built or acquired hotels will feature casinos as one of their essential facilities.

Zeng Zhonglu, professor at Macao Polytechnic Institute, pointed out that with more large casinos going into business, the profit margins of the smaller ones will inevitably fall.

This phenomenon has occurred in Las Vegas. Ever since large resort casinos started to appear in the city at the end of 1980s, the business of the small casinos has gone downhill. Their customers are now restricted mainly to retirees with little spending power, who have been abandoned by large casinos. Their shrinking profits have often led to mergers and acquisitions.

Zeng also queried whether it is appropriate for the SAR government to allow the gaming industry to develop so quickly.

The government is planning to increase gambling tables in Macao to 3,000, but the existing 1,000 plus tables were sufficient to entertain 16 million visitors last year. He wondered how many more visitors are needed to fill up 3,000 tables.

He also predicted that the development of the gaming industry will be hampered by Macao's limited land and human resources. And he warned that the central government may have other worries over the speed at which the industry is moving forward.

(HK Edition 02/22/2005 page3)