For U.S. billionaire Sheldon Adelson, the future of Asia's gaming boom looks rosy. After building some of the world's most profitable casinos in Macau and Singapore, Mr. Adelson, like MGM Resorts and Pinnacle Entertainment, is keen to diversify, eyeing markets such as Taiwan, the Philippines and Vietnam.
The stakes are high and so are the risks.
It was only less than three years ago that Mr. Adelson's now $28-billion (U.S.) gaming empire was ravaged to the brink of bankruptcy. The 2008 financial crisis sent shares in Las Vegas Sands , parent of Macau unit Sands China, plummeting.
Mr. Adelson had to stump up $1-billion from his personal wealth to avert a default, postponing projects in Macau, the world's biggest gambling destination, and laying off workers.
Few investors expect a repeat of Mr. Adelson's perilous dip to near-insolvency despite the current economic uncertainties, but his experience remains a textbook case for investor risk in the industry, analysts say.
Unfavourable regulation, political interference and underdeveloped infrastructure will be among the key risks as operators look to take advantage of the region's high economic growth and rising income levels.
"When we originally invested in Macau many years ago, there were similar risks that you see within the Philippines and Vietnamese markets," said Ranesh Verma, managing director and head of ING Bank's structured finance for telecom media & entertainment in Asia.
"You saw the potential but the biggest risks that we saw were effectively regulation and government interference," Singapore-based Mr. Verma said.
Over the past month, Mr. Adelson and other casino moguls such as Steve Wynn of Wynn Resorts Ltd. and Wynn Macau have stepped up rhetoric about expanding in Asia, eyeing a recent trend of Asian governments pushing to set up integrated casino resorts to boost tourism.
"There has been substantial communication from the major casino gaming companies stating their desires to invest between $3-billion and $20-billion in new mega casino resort projects," said HSBC's South East Asia senior consumer and gaming analyst Sean Monaghan.
Emerging Asia's strong growth and its affinity for gambling are attracting investors including Harbinger Capital, which is backing Vancouver-based operator Asian Coast Development (ACDL), and U.S. casino firm Pinnacle Entertainment , which bought 26 per cent of ACDL in May.
Lloyd Nathan, former president of MGM Resorts' global gaming development and now chief executive of ACDL, is building Vietnam's first mega casino resort complex, with the first resort set to open in 2013.
With the backing of Harbinger and Pinnacle for the $4.2-billion project, ACDL is set to develop a 400 acre plot, complete with five large-scale resorts, an 18-hole golf course and two kilometres of sandy beach.
"Most people are very focused on Macau and they think that is what Asian gaming is about, but there are different models out there," Nathan said.
Casino gaming, long considered a sensitive business in Vietnam, is becoming more open with the state media reporting the country's finance ministry is discussing a draft decree that lays down licensing and investment rules for investors.
MGM Resorts International majority owned MGM China has said it plans to set up shop in Taiwan.
The Philippines is also in the process of developing casino-integrated resorts, and is set to open a new $15-billion gaming complex in 2013.
Growing concerns that Macau may not renew licenses of the six casino operators - Sands China, MGM China, Wynn Macau, SJM, Galaxy Entertainment and Melco Crown - when they start to expire in 2020 may also prompt more investors to diversify into other Asian markets.
The possibility that China's government, which controls the flood of mainlanders into Macau through visa restrictions, may tighten the tap is also driving the diversification.
The prowess of Macau and Singapore's gaming markets - both eclipsing neon rival Las Vegas in revenue - has been a testament to the success of casino gambling in Asia.
Macau, the former Portuguese colony located on the southern tip of China and an hour away by ferry from Hong Kong, logged $13-billion for the first five months of this year, compared with Las Vegas' $10-billion for the whole of 2010.
Shares in Macau casino operators have surged over the past year on stellar gaming revenues, with Galaxy Entertainment, around 20 per cent owned by private-equity group Permira, tripling in market value over the past 12 months.
"There is a very strong possibility that Asia's total legal casino gaming market size might exceed that of the U.S. commercial market by the end of 2013," said Jonathan Galaviz, chief economist at Galaviz & Co.
The shift towards Asia is growing stronger with American and European companies looking to have a footprint here, said Frank Fahrenkopf, president of the American Gaming Association.
"You are seeing the interest of the companies who sell slot machines. Whether you are talking about IGT, Bally or WMS, who are now going to increase to look here, because this is where the growth is," the former Republican Party chairman said.
ACDL's Ho Tram property in Vietnam and Hong Kong-listed Cambodian casino operator NagaCorp, which announced plans in June for another gaming resort in Cambodia, are betting on gamblers from neighbouring countries such as Thailand and Malaysia as well as China and Korea.
ACDL's Nathan is also eyeing the Philippines to expand his firm's brand.
"That is a market we would absolutely look at," the UK- educated law graduate said, adding that the Canadian company may look to list on a global stock exchange.
Tom Arasi, former chief executive of Las Vegas Sands' Singapore casino, said the Philippines - a country where people are legally able to gamble - had a lot of potential in the near term.
"There is an existing proven gaming market and there is a lot of new construction going on there. When you juxtapose that with PAGCOR's relatively aging assets, that market is about to change drastically," said Mr. Arasi, chief executive of Harbinger Advisers, at the Global Gaming Conference in Macau in June.
PAGCOR is the state-owned casino operator in the Philippines.
Investors are also looking at potential opportunities in South Korea and Japan in the coming years.
South Korea - where all forms of legal gambling totalled around $18-billion last year, and illegal gambling around $35-billion - has a huge revenue potential for casino-resorts, said Jeffrey Jones, chairman of the Korea Tourism advisory board.
Debates over whether Japan will legalize gambling to help revitalize its economy in the wake of the devastating tsunami and nuclear crisis are continuing.
"Will it be legalized? Of course. It is a question of time," said Toru Mihara, a director at Osaka University and adviser to the government on gambling policy.
Infrastructure remains a looming challenge for markets such as Taiwan, which is drafting a law to allow the construction of casinos on its outlying islands.
Significant investment will be needed to upgrade road infrastructure and handle the volume of anticipated visitors, say industry analysts.
Transparency issues may also deter investment in places such as the Philippines, where state-owned PAGCOR is both the main gaming operator and gambling regulator.
Countries such as Vietnam, where gambling is legal only for foreigners, are unlikely to achieve Macau-like revenues.
"Vietnam has never had an integrated casino project of this magnitude and therefore, it is not a risk-free proposition. High volumes of foreign tourism traffic will be required to succeed," said Mr. Galaviz.
Despite the risks, investors say the lower cost of capital and tax rates compared to Macau and Singapore and the vast market potential make these countries rewarding.
Macau's tax is close to 40 per cent versus 15 per cent for the Philippines.
PAGCOR chief executive Cristino Naguiat, who took on the role last year to boost revenues of the state-owned gaming firm, said while there were no immediate plans to privatize, he had created a separate department to focus on regulation.
"Right now our focus is on improving our casino operations," he told Reuters in an interview, adding he expected gross revenue growth of 40 per cent with the opening of the new gaming complex in 2013, compared with an expected 15 per cent for its own casino operations this year.
Naguiat said he was trying to attract junket operators - middlemen who bring in high-rolling VIP guests - to boost revenue.
He said he was in talks with junket operators in Hong Kong and Korea and confirmed he has signed with two operators in Korea.