On June 1, the hotel/casino complex City of Dreams will open in the Chinese city of Macau, adding another level of hype, hope, and glitz to the former Portuguese colony that now surpasses Las Vegas.

City of Dreams is a perfect description of the gold-rush mentality of big U.S. companies like Wynn Resorts (NASDAQ:WYNN) and Las Vegas Sands (NYSE:LVS). They're looking for more exotic locales than Bethlehem, Pa. and Mississippi River towns to expand their empires.

The impact is noticeable. During 2009's first quarter, Wynn's one Macau hotel/casino accounted for $448.7 million, or about 60%, of the company's $740 million in total revenue. Las Vegas Sands' three Macau properties produced $755 million, or 70% of corporate revenue, during the first quarter.

For investors, Macau can offer good dreams and bad dreams. You must assess more than balance sheets -- and make sure what appears to be Chinese gold isn't iron pyrite.

Contradictions and complexities
Gold-rush fever has been doused with cold water by the global economic downturn. Gambling revenue for all of Macau's casinos was down 12.8% year over year in the first quarter, says a market analysis by the China-based casino operator Galaxy Entertainment. Revenue for 2009 may fall 10% from 2008, even with the opening of new casinos.

At the same time, companies are building, developing, and revising plans for more casinos. City of Dreams is the 32nd in Macau.

However, the Chinese government has limited visits to Macau from the Chinese mainland and placed some restrictions on existing licensees. Analysts expect the government to ease the restrictions eventually, but they aren't predicting when.

And if other U.S. companies, such as Ameristar Casinos (NASDAQ:ASCA) or Penn National Gaming (NASDAQ:PENN), are dreaming about Asia, they can forget China for now. The government has issued six gambling licenses, and MGM Mirage (NYSE:MGM) is the other U.S. player. Galaxy Entertainment, SJM Holdings, and Melco Crown Entertainment (NASDAQ:MPEL) represent the China-based licensees.

Hedging its bets
In Macau, the most debt-riddled U.S. operator is taking the least risk. MGM Mirage's only Macau casino is a 50-50 joint venture whose revenue isn't disclosed. MGM Mirage owns many properties, so Macau is only a piece of a diverse portfolio.

MGM Mirage recently revealed that the New Jersey Division of Gaming Enforcement says its China-based joint venture partner is "unsuitable" and is recommending that MGM Mirage should stop doing business with its local partner.

The division's opinion may lead to a hearing by the state's casino control commission about the license for MGM Mirage's joint venture ownership with Boyd Gaming (NYSE:BYD) of The Borgata in Atlantic City. It's possible that MGM Mirage might ultimately sell its stake in the Macau or Atlantic City casinos.

Taking greater risks
Wynn Resorts and Las Vegas Sands are making bigger bets because Macau contributes such a big share of their total revenue.

Wynn owns two casino/hotels in Las Vegas. In the short term, Macau's influence should diminish somewhat as Wynn's newest Las Vegas hotel, which opened in December, attracts more visitors.

Las Vegas Sands has grabbed 26% of the Macau market share, according to market analysis by Galaxy Entertainment. Wynn has 13.5%, and MGM Mirage has 8%.

Wynn and Las Vegas Sands want more. Wynn plans to add another resort hotel and gambling space in 2010. Las Vegas Sands had envisioned building five more casino/resort complexes, but financial constraints have forced it to revise plans and suspend construction.

Las Vegas Sands is still choking on debt, and it may sell non-core assets and/or sell minority stakes in Macau properties. To reduce expenses, a top executive recently told Bloomberg that 3,000 to 4,000 Macau workers would be fired. Citing an unnamed source, The Wall Street Journal recently said the company was contemplating an IPO for its Macau assets.

The next bet
Casino developers continue to drool over Macau's prospects, since one billion people live within a three-hour flight of the former colony. Today, Macau looks somewhat like Las Vegas in its adolescence, making the transition from a haven for hardcore gamblers, day-trippers, and overnight visitors to a more broadly appealing avenue of fancy hotels and entertainment along with its casinos.

While many gambling operations in Macau may be modest compared to big-name Vegas casinos, U.S. companies' ambitions for the island definitely aren't. However, given the uncertainty of corporate balance sheets, China's government, and the global economy, U.S. investors will face steep odds in determining whether Macau will provide sweet dreams or nightmares for their shares.

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Fool contributor Robert Steyer doesn't own shares of any companies cited in this article. Ameristar Casinos is a Motley Fool Hidden Gems recommendation. Melco is a Global Gains recommendation. The Motley Fool has a disclosure policy.