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Casinos gain as gambling hub Macau stays strong

The Associated Press

Shares of major casino operators soared Wednesday after a report confirmed that revenue in the Asian gambling hub Macau is still on the rise.

Macau, an hour by ferry west of Hong Kong, is the world's biggest gambling market. It's the only place in China where casino gambling is legal.

Casino revenue in Macau climbed 13.5 percent to a record $38 billion in 2012, according to a gaming regulator.

The rate of growth did ease some — revenue shot up 42 percent in 2011 — as China's economy slowed and the country's wealthy gamblers held back amid fears about a crackdown on corruption.

However, analysts noted that the decline in Chinese high rollers, who account for two-thirds of Macau casino revenue, has been offset by growing numbers of middle-class Chinese.

Gambling revenue in Macau has now swept far past Las Vegas, where growth has been flat in recent years. As a result, a number of U.S.-based casino operators are pushing ahead with expansion plans there.

Shares Las Vegas Sand Corp., which earns most of its money in Macau, jumped 5.6 percent to $48.74. The company is currently setting up its fourth hotel casino in Macau. While costs for that project drove down its overall net income by 1 percent in its third quarter, its profit in Macau still rose 17 percent to $326.7 million for the period.

Shares of Wynn Resorts Ltd, which also earns the bulk of its profits in Macau and has plans for a $4 billion resort there, jumped more than 5 percent to $118.62 by early afternoon. The company's revenue from the region slipped slightly to $910.5 million in the third quarter but made up the bulk of its $1.3 billion company-wide revenue for the period.

And MGM Resorts International Inc. recently received approval to build a $2.5 billion casino resort in Macau, its second for the region. The company reported a larger loss in its most recent quarter due to lower traffic and hotel room rates in Las Vegas. But it has gotten a boost from business in Macau, where revenue increased 7 percent in the most recent period. The company's shares gained nearly 5 percent to $12.22 Wednesday.

The casino companies gained faster than broader markets. The Standard & Poor's 500 index rose 1.8 percent Wednesday afternoon.