If you're looking for further signs of the rise of the Asian Century (and some of the associated risks), there's interesting news from Macau today.

Wynn Resorts - operator of one of the new casinos perched at the mouth of the Pearl River Delta - now makes more money in Macau than in Las Vegas, according to a report by Neil Gough in the South China Morning Post. Profit or operating income at the Wynn Macau in Q4 2007 was US$50.56 million, beating the US$42.38 million profit at the Las Vegas Strip property. And for those more interested in just how much gamblers fork out: estimated net revenues in Macau were US$387 million (up 55 percent) versus US$324 million in Las Vegas.

The huge opportunities on offer in Macau since it deregulated and loosened the gambling monopoly of Stanley Ho have attracted some of the heaviest and brightest operators from Las Vegas and they're doing well on paper. Walking through the playing rooms with the moderate-sized crowds of mainland Chinese throwing down the red HK$100 notes with apparent ease onto tables gives some sense of how well the casinos are doing. And when you think that only a small proportion of China's 1.2 billion population will have access to the gambling tables of Macau, then the sheer size of this massive opportunity becomes clearer. And that's what many foreign and local investors have been focused on during the past few years.

The Macau authorities have done very well so far to manage the risk. The days of shootouts, bombings and executions on the streets of Macau have thankfully faded into memories as the local scene has been progressively cleaned up. Long may that remain the case.

But the massive opportunity that lies across Macau's border in mainland China is also the potential source of risk. Where is the money that flows across the gaming tables so freely coming from? [Visitors to the VIP gambling rooms talk of gamblers with huge sums of money looking like taxi drivers or the offspring of wealthy families]. What happens in the event of a slowing of the Chinese economy?

In the meanwhile, the good times are rolling.

Hong Kong, Thursday February 14 2008