Macao's gaming revenue dropped by 10 percent in the third quarter as travel restrictions on mainlanders and slowing economies have cooled the gaming haven's three-year boom.

And analysts say the credit crisis will further dampen gambling appetites and stall several high-profile casino projects.

Casino revenue fell to 25.99 billion patacas ($3.2 billion) in the July-September period, quarter-on-quarter, according to figures released by the Macao Gaming Inspection and Coordination Bureau yesterday.

This was the second successive quarter that casino revenue slid, when compared with the previous three-month period, after a near-uninterrupted growth streak since 2005. Macao raked in 28.89 billion patacas from April to June.

Takings from VIP baccarat - known as the game of choice for many mainland punters - suffered most, sliding 2.84 billion patacas ($349 million). But takings from slot machines showed a slight rise.

Gambling revenue often peaks during mainland holidays, and there were fewer in the third quarter. Beijing also hosted the 2008 Olympic Games, which kept many people glued to their televisions for 16 days in August.

Still, analysts say, restrictions on visa approvals for mainland travelers to the tiny enclave have been smothering Macao's major source of revenue, and it started before the financial crisis intensified.

"The credit crunch could delay project developments in the pipeline," Morgan Stanley analysts Praveen Choudhary and Corey Chan wrote.

Macao slapped a moratorium in April on the issuance of new casino licenses and imposed a land freeze on the building of new casinos.

Macao's casino revenue had been growing at breakneck speed since 2003, when it allowed foreign operators to compete with former monopoly-holder and billionaire Stanley Ho.

Now, the global credit crunch, visa restrictions, and stiff competition from over-capacity are dampening the boom.

In the longer term, analysts warn, the scarcity of credit might stall several high-profile expansion projects in Macao.

Las Vegas Sands Chairman Sheldon Adelson told Reuters last month that his firm was reconsidering efforts to obtain $5.25 billion in financing for the Cotai Strip and was likely to instead seek less financing for individual projects.

Analysts said the firm needs about $1.5 billion to complete projects on two plots of land on the Cotai Strip, and it is likely to find refinancing of its Macao debt difficult, or at least expensive.

"I know that funding is an issue, and we're sorting it out as a group," David Sylvester, the company's head of retail in Asia, told Reuters in an interview last week.

But not all firms say they are hurting. Melco Crown Entertainment said the opening of its flagship casino-hotel resort in Macao has been unaffected by the global financial turmoil.

"City of Dreams remains fully on target to open to the public during the first half of 2009," the firm said in a statement. "Our projected budget for phases one and two of City of Dreams also remains unchanged."

Reuters

(HK Edition 10/21/2008 page2)