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: Push through the packed crowds in the smoke-filled haze of the main gambling hall of the old Lisboa, once Macau’s flagship casino, or try to squeeze into a spot at a packed baccarat table at the Sands or its sister casino, the Venetian, now the most prominent property, and you would probably conclude that the gambling industry in Macau is thriving. Over the past year gambling revenues in the territory have increased by 27% to an all-time high (see chart). On November 10th Las Vegas Sands, owner of both the Sands and the Venetian, said revenues were up by two-thirds compared with a year earlier, and it had moved from an operating loss to a profit because of Macau’s performance. And yet, as good as all that may seem, trouble is looming.

In the four years since the ending of the monopoly on gambling held by SJM Holdings, the Lisboa’s parent, Macau has been transformed from a sleepy island into a legitimate rival to Las Vegas, with the same operators—Sands, MGM Mirage and Wynn Resorts—as the driving force. Growth, however, peaked in January and revenues have declined in the past two quarters.

Factory closings in southern China and the broader downturn in regional business have hit discretionary income. Worse still has been Beijing’s tightening of the availability of travel visas for mainland residents, from twice a month to once a month in June and, more recently, to once every other month. Transit to Macau through Hong Kong has been blocked entirely. These restrictions have the greatest impact on the richest and highest-spending customers, and not surprisingly this segment has shown the biggest decline in business.

The slowdown comes just as many casino operators are entering the final stage of multibillion dollar investments in Macau that are transforming a stretch of seafront into an eastern version of the Las Vegas Strip. But most of the casinos are still under construction. Casino operators typically carry a lot of debt, the level of which peaks just as big building projects are completed—which, unfortunately for these companies, is now. The credit crunch, weakening economic conditions and tighter visa rules add up to a terrible confluence of bad news.