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It's no secret that Macau has replaced Las Vegas as the mecca of the gambling world. Gambling in China's Macau has grown at a torrid pace since the government ended Stanley Ho's monopoly and opened the market to outside operators in the early '00s.

But not all of Macau is equal, and the vision Las Vegas Sands (NYSE: LVS  ) CEO Sheldon Adelson saw when he started building on the Cotai Strip is starting to take shape.

Macau is split into three gambling regions; the Macau Peninsula, Taipa, and the Cotai Strip. Las Vegas Sands started the move to Macau in the Peninsula area when it built Sands Macau, and operators like MGM Resorts (NYSE: MGM  ) have followed with hotels of their own.

Now, the biggest developments are going into the Cotai Strip, an area of reclaimed land between Taipa and Coloane. Las Vegas Sands controls a big portion of the area, but Melco Crown Entertainment (Nasdaq: MPEL  ) has the City of Dreams and Wynn Resorts (Nasdaq: WYNN  ) has property for a future development.

Revenue flowing from the older Macau Peninsula to the newer Strip is reminiscent of the transition from Las Vegas Downtown to the Las Vegas Strip, as more casinos were built there. The table below has revenue changes at six casinos around the area to show where the money is moving.



Q3 Revenue Change (YOY)

Sands Macau (LVS) Macau Peninsula +2.6%
Wynn Macau (WYNN) Macau Peninsula +49.7%
Altria (MPEL) Taipa +2.3%
Four Seasons Macau (LVS) Cotai +139.0%
City of Dreams (MPEL) Cotai +75.2%
Venetian Macau (LVS) Cotai +25.6%

Source: Company data. YOY =  year over year.

Macau as a whole saw third-quarter gaming revenue increase 49.1% from the year-ago period, so we can use that as a baseline for comparison. As the table shows, Cotai Strip casinos City of Dreams and Four Seasons Macau outpaced gaming growth, taking share from the rest of the industry. Cotai as a whole wildly outperformed the other two areas in terms of growth. The only anomaly is Wynn Macau, which opened its Encore addition in April, adding 414 suites and more gaming area, pushing its numbers higher.

When you're looking at gambling investments and Macau in particular it's important to understand the trends. The growth on the Cotai Strip gives a huge advantage to Las Vegas Sands, which will open more hotel and gaming space there in 2011 and 2012, tightening its grip on the new growth engine of Macau.

Interested in reading more about Las Vegas Sands? Click here to add it to My Watchlist, and My Watchlist will find all of our Foolish analysis on this stock.

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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Melco Crown Entertainment is a Motley Fool Global Gains recommendation. 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.

Read/Post Comments (3) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 23, 2010, at 5:47 PM, lazzybum wrote:

    It is nice to know not all fools are fools. One of you even got it right.

  • Report this Comment On November 23, 2010, at 10:15 PM, TMFFlushDraw wrote:

    It is in the best strategic position of any casino company without a doubt.

    Fool On!

    Travis Hoium (TMFFlushDraw)

  • Report this Comment On November 24, 2010, at 5:43 PM, mrkrazyk wrote:

    The morons at the Motley Fools are talking great stuuff about the casinos after spending the last year and telling everyone what bad buys they were and how they would all go bankrupt, the only thing the Motley Morons can brag about is picking Walmart 30 years ago, keep up the good work at Motley Fools, you people are complete idiots.

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