You'd never think that year/year casino revenue for August in Macao just grew 44%, at least not from stories like this one, well-researched and informative though it is. Macao is "a risky high-wire act," it opines. In some respects I agree with that (see below) but am neither of the opinion that it was always a lead-pipe cinch -- MGM Mirage is finding that out the hard way, as did Melco Crown Entertainment -- nor that it's time to man the lifeboats.

Casino concessionaires are definitely "squabbling with each other over their shares of the golden goose," as author Muhammad Cohen puts it. But the foot on the neck of said goose is that of the Chinese government, which fiddles with the Macanese economy like the burners on a gas stove: hotter, colder, hotter, colder, ad infinitum.

Cohen nails the issue in passing, when he remarks that the speedy profitability of Sands Macao "may have set expectatios unrealistically high." Exactly. Pre-Sands Macao wasn't a slot market, and it wasn't a luxury market or an overnight market either. And it's not going to get there in four short years -- at least not at the rate necessary to justify the formerly breakneck pace of development.

Flush with early success, some operators (well, Las Vegas Sands mainly) flooded Macao with new gambling capacity. Exponential increases in business that fueled the boom years were bound to slacken eventually. It was inevitable, even if Peking sharpened the deceleration once it decided too many Chinese were gambling too much money in Macao, and stomped on the brakes this year.

Thanks to micromanagement from ChiComm HQ, a once-frenzied Macao market is artificially constrained, but hardly depressed. Even so, a degree of caution was always in order -- especially since both the Macanese government and its Peking overseers seem to pride themselves on being unpredictable and keeping casino developers upon tenterhooks.

As Jonathan Galaviz points out, we're seeing a cyclical phenomenon that plays out constantly in Las Vegas. Like I always say, Wall Street is euphoric when business is good, then overreacts and over-corrects at every speed bump.

The truly ominous note is struck when Cohen reports that the current detente involving VIP commissions may not hold. The current commission rate is reported as consuming between 40%-45% of casino revenue. Tack on a 35%-plus tax rate and operators literally cannot afford a bidding war over the commissions they pay to junketeers like A-Max. Sands was ginning up for just such a fight recently.

If that sort of battle were to break out, it would be a game of Russian roulette, with the participants vying to see who could sustain the thinnest operating profit or sustain the most losses before crying uncle. The Chinese government isn't making anyone's life easy, but if casino operators want to drive the Macao car straight off the cliff, more bluffing and raising would be a very efficient way of doing it.