JBL: The Macau Shuffle

Singapore took a first big step toward legalized gambling Friday when it announced Las Vegas Sands (LVS Quote) had won the bidding to build the country's first casino.

While Singapore reversed its decades-old ban on casino gambling in 2005, Macau plans to be the gambling capital of the world, and already has gambling revenue matching Las Vegas' (a.k.a. "Lost Wages").

Colonized by the Portuguese in the 16th century, Macau has long been a vital port for regional and international commerce between China and the rest of the world. (Don't you love how when you steal something from somebody, history calls it "colonization?")

Macau's location -- under 40 miles from Hong Kong -- has made it easy for this "Special Administrative Region" of China to become the Las Vegas of Asia. The pioneers are done taking arrows; now is the time when settlers have been cashing in and where making money for investors comes.

Shuffle Master (SHFL Quote) owns the gambling market. With a market share of more than 90% in automatic shufflers, it is truly the infrastructure of gaming. Shuffle Master also has more than 3,700 of the world's 45,000 proprietary gaming tables. Macau has 1,388 tables, and is expected to reach 4,000 by 2009, according to Andes Cheng of South China Research Ltd. Shuffle Master is in the best position to capitalize.

Shuffle Master and Melco reached an agreement in April that will allow a gaming technology alliance for a term of 20 years to develop localized gaming technologies in legal gaming areas in Asia, including Macau. That includes an exclusive distributorship of the existing gaming products of both Shuffle Master and its Australian-based Stargames. The agreement also includes Asia-based cruise ships.

Stargames is especially important because of a shortage of dealers -- who tend to smirk when you lose -- in the fast-growing Macau region. Stargames, based in Australia, makes computerized casino tables that don't require dealers.

To view John Layfield's video take of this column, click here.