With 60% of Las Vegas Sands' (NYSE:LVS) revenue coming from Macau, investors should be worried about whether the gambling enclave's results can be sustained. There are a lot of factors weighing against the sustainability, and because Sands is more heavily invested in Macau than many of its rivals are, it has the most to lose from any decline.

On a hot streak

Without question, the Macau comeback has been remarkable. Following a 26-month skein where year-over-year gambling revenue headed ever lower, the recovery has since cobbled together 11 straight months of gains. But almost all the easy money has been made, and after July's numbers are reported next month, comparative performance will soon become more difficult to beat.

Las Vegas Parisian resort in Macau

Image source: Las Vegas Sands.

Already the streak may be running out of steam. While June saw Macau post a 26% increase in gaming revenues of 19.99 billion patacas, the local currency, or about $2.5 billion, analysts had been looking for as much as a 33% rise, and it marks the first time since January that gambling revenue came in below 20 billion patacas. And despite the big investment casinos were forced to make in mass-market entertainment to increase Macau's visibility as a tourist destination, VIP gambling remains the biggest driver.

Macau's Gaming Inspection and Coordination Bureau showed VIP baccarat revenue of 35.9 billion patacas (or $4.5 billion) in the second quarter of 2017, up 35% from 26.6 billion patacas last year. In contrast, mass-market baccarat rose only 5.7% year over year to 19.7 billion patacas, but unlike the VIP play, which also rose sequentially, mass-market baccarat was down from the first quarter.

Betting on high rollers

The VIP market has sustained casino operators such as Sands, Wynn Resorts (NASDAQ:WYNN), and to a lesser extent MGM Resorts (NYSE:MGM), which derives only about 20% of its revenue from Macau, the only place in China it's legal to gamble. But the push to a mass-market environment encouraged them because it was a more profitable business, and how long the VIP market can hold up is a matter of debate.

It's clear that after a two-year absence, their return to Macau was more than simply to check out the new venues the resort operators had opened. It may have been what lured them back at first, but they've proved they were willing to stay and bet, though it may not be for much longer.

Macauskyline at night

Image source: Getty Images.

Casinos contract with junket operators in China to market their resorts to VIP gamblers and have them stay at their hotels and play in the casinos. The junkets lend the gamblers money and ply them with emoluments, and they receive in return from the casinos a percentage of the money they bet. But because gambling is officially frowned on in China, the junkets have to entice them with amenities and benefits, anything really that doesn't have to do with gambling. Run afoul of that as a group of 19 Crown Resorts (NASDAQOTH: CWLDF) did last year, and you'll find yourself in jail as the casino employees did last month, after being convicted of illegally promoting gambling on the mainland.

That shows China is serious about limiting the expansion of gambling, and then earlier this month an analyst warned his clients of a liquidity crisis at "one of Macau's largest" junket operators as China seems to be entering a second phase of a crackdown on money laundering through the enclave. Equally troubling is a new ban on smoking at VIP tables that was approved recently and goes into effect on Jan. 1, 2019.

When a hot hand turns cold

None of this even touches on the cooling housing market in China, which plays a central role in VIP gambling, as the high rollers often use their real estate as collateral for loans, and coupled with a profusion of new gambling opportunities throughout Asia and Australia, maybe even in Japan, Macau's preeminence as a casino mecca may not hold for very long.

There are a lot of risks facing Las Vegas Sands in Macau these days, and few catalysts for higher growth. That should leave investors worried the casino operator may run into a bit of bad luck sooner rather than later.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.