How Big Could Macau's Gaming Market Be in a Decade?

Macau's growth has lifted the stock of U.S. gaming companies with exposure there, but the wave of Asian gamblers may have just begun.

Apr 7, 2014 at 3:30PM

Macau's gaming market is now seven times the size of the Las Vegas Strip and outgrew the Sin City 18.5% to 4.8% in 2013. So, we should at least be pondering if there's an upper limit to how large the market can grow. 

Sands Cotai Central

Massive new resorts like Sands Cotai Central from Las Vegas Sands will bring even more players to Macau. Source: Las Vegas Sands.

It's the growth of Macau's overall market that will really drive Las Vegas Sands (NYSE:LVS), Wynn Resorts (NASDAQ:WYNN), Melco Crown (NASDAQ:MPEL), and MGM Resorts (NYSE:MGM) over the next few years. Other than trading market share between one another and the other two concessionaires, SJM and Galaxy, that's the only way to grow.

First, let's look at the size of Macau's gaming revenue compared to China's GDP, a good proxy for the relative size of Macau's gaming business. I've provided the numbers below along with a comparison to the same figures in the U.S.


2013 GDP

2013 Gross Gaming Revenue

Gaming Revenue as % of GDP

United States

$15.68 trillion 

$38.1 billion* 



$9.4 trillion 

$45.2 billion 


*U.S. gross gaming revenue not yet final. Estimate based on 2012 data and 2.1% growth through November 2013. Source: UNLV Center for Gaming Research and Macau Gaming Inspection and Coordination Bureau.

The Chinese are known for their gambling, but it's a bit surprising to see double the gaming revenue as a percentage of GDP versus the U.S. Keep in mind the total market for gaming in the U.S. is about six times the size of the Las Vegas Strip, so gaming in the U.S. is much more than just Las Vegas.

One advantage Macau has over Sin City is that it's the only place in China where gambling is legal. So, while expanded gaming in Kansas may take away from Las Vegas growth, as China's economy grows, so will Macau. 

Lvs Sands Macau Gaming Area

Casinos like this are packed across Macau. Source: Las Vegas Sands.

How big can Macau get?
When considering how big Macau could get over the next decade, we need to consider both China's economic growth as well as gaming as a percentage of the economy. If China's GDP grows between 7% and 8% over the next decade, the economy would double in size, giving a larger base for Macau to draw from.

So, China's growth alone will lead to growth in Macau, but so will access. As I pointed out above, Macau is the only place in China where gambling is legal and a limiting factor to tourism has been access. A high speed rail into mainland China and a bridge to Hong Kong, among other infrastructure improvements, will also lead to growth in Macau. These improvements will give China's growing middle class easy access to Macau and make it an international destination as well. Even when you consider the potential for gaming expansion around Asia, I think Macau can double its gaming revenue as a percentage of China's GDP to around 1% from 0.48% in 2013..

If China's GDP doubles, and gaming revenue as a percentage of the economy doubles, it's easy to conceive that gaming revenue could quadruple to around $200 billion by 2023. Put another way, that would be 16% annual growth, a level Macau has surpassed over the past decade.

A $200 billion gaming market may seem impossible to fathom, but as the region grows and resorts expand, it's a distinct reality. That would be a boon for Las Vegas Sands, Wynn, Melco Crown, and MGM, who will all share in the spoils of a growing Macau.

Three stocks poised to be multibaggers
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry, like the companies who dominate Macau today. Our analysts have found multibagger stocks time and again. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.

Travis Hoium manages an account that owns shares of Wynn Resorts, Limited. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information