China has quietly eased restrictions on its citizens traveling from Guangdong province to Macau, sending casino stocks soaring on Monday as industry executives bet on record October earnings in the world's hottest gambling market.

Shares in Galaxy Entertainment and Melco International jumped around 9 percent, and SJM Holdings was up more than 6 percent, while the broader Hang Seng stock index fell 0.7 percent.

Alarmed that some Guangdong residents were gambling too much in neighboring Macau, China last year imposed new rules limiting them to two trips a year to the former Portuguese enclave.

But the authorities began easing up on the rule as early as two months ago, and noticeably loosened the restriction at the start of this month, said top executives at two of Macau's six casino licensees, speaking on condition of anonymity due to the sensitivity of the situation.

The latest version is (they can travel to Macau) once a month out of Guangdong, said one of the executives. Gaming revenues for the first two weeks of the month have been good.

The other executive forecast that October -- a high travel season for Chinese because of the October 1 Golden Week holiday -- could see record monthly casino revenues, in part due to the relaxing of the visa rules.

Macau's six casino operators include U.S. giants Las Vegas Sands and Wynn Resorts, along with home-grown players Galaxy and SJM Holdings and joint ventures Melco Crown and a casino jointly operated by MGM Mirage.

We're seeing repeat customers coming back more regularly than previously, said an executive at one of the six operators. It's been occurring for two and a half months, but they probably lightened up even more since September 1.

Macau has rocketed on to the global gambling stage in recent years following reforms earlier this decade that saw an end to a previous monopoly and awarding of licenses to multiple players, boosting competition.

The market grew 57 percent in 2007 alone, fueled by a huge influx of mainland Chinese, who now make up about 65 percent of casino visitors.


Macau generated HK$105.6 billion ($13.5 billion) in gross gaming revenues in 2008, more than double the HK$46.7 billion generated by the Las Vegas Strip during the same period, according to a prospectus from Wynn Macau, the Macau assets of Wynn Resorts, which is preparing an IPO in Hong Kong.

But Beijing clamped down on mainland visitors to Macau in the middle of last year amid a proliferation of stories of officials illegally gambling away millions of dollars in government funds.

That clampdown, combined with the global financial crisis, sent a chill through Macau, with gaming revenue down 12.5 percent in the first half of the year.

The return of Chinese tourists and an improving economy helped Macau post record casino revenue in August.

September will be very good, but not a record, said one of the executives. October will be the highest because of the eight-day Golden Week.

(Reporting by Doug Young; Editing by Chris Lewis and Valerie Lee)