By Farah Master and Donny Kwok

HONG KONG | Mon Sep 12, 2011 6:03am EDT

HONG KONG (Reuters) - Wynn Macau Ltd (1128.HK), a unit of U.S. casino mogul Steve Wynn's Wynn Resorts Ltd (WYNN.O), has formally accepted the terms and agreement of a land concession contract for its new billion-dollar Macau casino.

The $16 billion dollar gaming company announced the initial agreement for its Cotai property ahead of Macau rivals MGM China Holdings Ltd (2282.HK), owned by U.S. gaming giant MGM Resorts International (MGM.N), and SJM Holdings Ltd (0880.HK), controlled by the family of Macau kingpin Stanley Ho.

Out of Macau's six licensed casino operators, MGM and SJM are also awaiting government clearance to build new properties in the world's largest gaming market.

Galaxy Entertainment Group Ltd (0027.HK), Sands China Ltd (1928.HK) and Melco Crown Entertainment Ltd (MPEL.O) have already built expansive resorts on Macau's developing Cotai strip, increasingly drawing tourists away from the former Portuguese colony's main peninsula.

"It is not a slam dunk at this stage. There is still risk associated with all these big projects in terms of timing and costs" said Royal Bank of Scotland Group Plc (RBS.N) gaming analyst Philip Tulk in Hong Kong.

The next step would be securing labour, Tulk said, adding that Wynn would potentially have to compete with three other casino operators in building their properties, a challenge in Macau's already constrained labour market.

Shares in Wynn Macau were down 4.1 percent by 0401 GMT on Monday, tumbling off early gains. MGM China was down 5.1 percent and SJM had fallen 4.3 percent, while Galaxy and Sands China both dropped more than 7 percent. Hong Kong's main Hang Seng Index markets/index?symbol=hk%21hsi">.HSI was down 3.4 percent.

LABOUR CONCERNS

Wynn Macau, the second largest casino operator by market capitalisation in the enclave an hour from Hong Kong by ferry, said on Monday that it would pay $193.43 million to the Macau government for use of land to develop its resort project.

Wynn said it had been given five years to complete development of the land area, which spans 51 acres and is set to become a resort containing a five-star hotel, gaming areas, retail, entertainment, food and beverage, spa and convention offerings

While the land premium disclosed is roughly double that paid by Galaxy for its $2 billion Cotai casino, Tulk said, Wynn would easily be able to fund initial expenses because of its $1 billion in cash stated at the end of June.

Melco Crown is also due to start building on a new Cotai site, but timing has not been confirmed. Sands China is also likely to start developing its last land parcel after the completion of a new casino in Cotai opening next year.

J.P. Morgan (JPM.N) gaming analyst Kenneth Fong in Hong Kong said Wynn's new casino was likely to cost about $3 billion.

"The approval means Wynn can start initial soil testing and construction work. Based on the experiences of other projects in Macau of this size, we believe Wynn Cotai should be able to open by the end of 2015," he said.

(Editing by Chris Lewis)