HONG KONG - MACAU, the world's largest gaming hub, said it would rein in the booming industry by halting the issue of new licenses and freezing land allocations for the construction of more casinos.

In the past, Macau has flung its doors open to Las Vegas gaming giants, including Wynn Resorts, MGM Mirage and the Las Vegas Sands, which built the Venetian Macau - catapulting the city past Las Vegas in gambling revenue last year.

But Macau's Chief Executive, Edmund Ho, made the surprise announcement on Tuesday that no land would be allocated for the building of new casinos in the tiny enclave. Nor would the number of casino licences be increased from the current three.

Amid mounting social tensions in the enclave and perceptions of endemic graft linked to the gaming boom, Mr Ho said the new policies stemmed in part from the wishes of Beijing.

'At this stage, we've held some assessments and discussions and followed the Central Government's (Beijing's) directives on the gaming industry and decided to take these policy measures,' Mr Ho told Macau's legislators.

'We must continue to preserve the positive trend of our economic development and solve problems that may have arisen as a result ... and to ensure long-term social stability,' he added.

Mr Ho met with Chinese president Hu Jintao in Beijing in March during the annual session of the National People's Congress.

Among those international players still looking to pile into the gaming mecca are Mr Richard Branson's Virgin Group, Playboy Enterprises with the opening of a Playboy mansion next year and Harrah's Entertainment - the Las Vegas gaming Goliath.

Ongoing casino projects and those already granted government approval would not be affected, said a spokesperson with Macau's Government Information Bureau.

Macau currently has three casino licences and three casino sub-licences that allow a total of six companies to operate 29 casinos in the enclave, with some observers saying a consolidation of the gaming industry was now likely.

'There might be a possibility of the smaller casinos merging into the bigger casinos,' said Mr Larry So, a Macau academic and political commentator. 'We may see some of the smaller ones close up.'

'This is great news for these companies because it prevents other casino companies from entering the Macau market,' said Mr William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York.

He said that call options were active in Wynn, MGM, Las Vegas Sands and Melco PBL Entertainment, one of the six approved Macau casino licensees.

While Macau's casinos have energised the enclave's once sleepy economy, the boom has had a darker side, spawning anti- government protests at a growing wealth gap and perceptions of endemic graft. In January, former official Ao Man-long was jailed for 27 years for a litany of graft charges, including kickbacks to speed the construction of casinos.

The transformation of Macau, an enclave of Unesco world heritage buildings an hour's boat ride from Hong Kong, has been nothing short of remarkable since Portugal handed it back to Chinese rule in 1999 and it liberalised its once monopolistic gaming sector. -- REUTERS