While China faces headwinds when it comes to economic activity and manufacturing, the nation continues to drive forward in terms of a rising consumer culture. Improving personal finances, high savings rates and rising wages are propelling a major surge in consumerism. As such, China's growing and prospering middle class continues to be an important sub-theme for investors in the nation.

Setting aside growing demand for televisions, cars and Coach Inc. (NYSE:COH) handbags, the Chinese are also very fond of rolling the dice with some of their disposable wealth. For investors, the former Portuguese colony and gambling mecca of Macau could be the key to Chinese consumer profits for years to come.

Rising Entertainment Budgets

While mature gambling destinations like Las Vegas and Atlantic City struggle with muted consumer spending in the U.S., Macau continues to be a bright spot for casino operators. Close to the Asian financial epicenter of Hong Kong, the special district’s 47 casinos have a virtual monopoly on gambling rights in China. And all of them continue to see rising spending at their tables and gaming machines.

After a strong March, Macau managed a new record for gaming revenues in April. All in all, $3.92 billion was gambled away in Macau last month. That’s a 10.6% increase over April 2013 ands on top of a nearly 20% increase in gambling revenue in the first quarter. Both numbers far outpaced best-case analyst projections.

There are plenty of reasons to believe that the good times will continue rolling, too.

Traditionally, Macau's casinos have been geared to high rollers and China’s mega-rich, though that has been changing quickly as China's wealth spreads. Casino and resort operators have begun making their offerings more family-friendly, similar to what Las Vegas did in the 1990s. Gamblers with kids in tow can now find theme parks, arcades and kid-oriented shows. As such, the VIP and high-roller segment has begun to shift, and now accounts for only about 35% of its gaming profit.

And with Beijing spending big dollars to improve bridges and other infrastructure into the region, Macau should continue to see rising interest from middle class mainland tourists. All in all, nearly 7.69 million people visited Macau during the first quarter. That’s an increase of 8.7%. The bulk of those visitors came from mainland China.

Placing Your Bets

With Macau continuing to a hotbed of activity, investors may want to give the region a place in their portfolios. A prime play should be the Market Vectors Gaming ETF (NYSE Arca:BJK). The ETF tracks 45 different firms associated with gambling. These include firms with direct Macau exposure like MGM Resorts International (NYSE:MGM), as well as gaming equipment producers like Bally Technologies, Inc. (NYSE:BYI). So far, BJK has been a great performer and has produced a 30% annual return over the last five years. Expenses for the ETF are a relatively cheap 0.65%. Likewise, the PowerShares Dynamic Leisure & Entertainment ETF (NYSE Arca:PEJ) does offer some exposure to the gambling theme.

To get focused Macau exposure, though, investors need to eye the individual superstars in the region.

At the top of that list is Las Vegas-based Wynn Resorts Ltd. (Nasdaq:WYNN). WYNN managed a 14.2% increase in its Macau revenues, according to its latest report. What’s impressive is that WYNN also realized 23%-plus gains in table play for both VIP and regular clients. That bests the average for all Macau casinos. With new resorts opening on Macau's Cotai Strip in 2016, WYNN looks to continue powering forward in China. For a more direct bet on Wynn’s China success, it sold a partial stake in Wynn Macau Ltd. (OTC:WYNMF) to the public a few years back.

Not to be outdone, Hong Kong-based Melco Crown Entertainment Ltd. ADR (Nasdaq:MPEL) features zero exposure to gaming outside of Macau, while Las Vegas Sands Corp.'s (NYSE:LVS) general focus is middle market and retail gamblers. Both have continued to rack up impressive earnings in the region.

The Bottom Line

China's growing consumer wealth is spilling over to areas of entrainment as well, namely gambling. Capturing the lion's share of that spending is Macau. Gambling revenues continue to rise in the region, and given just how big China’s consumer story is, the time to bet on Macau could be now.

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