However, Virgin is still talking with other potential partners on plans to build and run a casino and resort development in Macau, one source said.

British billionaire Branson visited Macau with Tabcorp boss Matthew Slatter last month to look at potential sites and partners, but both sides have since failed to reach a deal.

"We can't see that [partnership] going anywhere. These things happen all the time," one source said, adding discussions had only been in the early stages.

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Another source said Virgin is still talking to a number of other potential partners on the development in Macau.

"Virgin is obviously moving forward and still talking to partners," the source said.

Tabcorp and Virgin declined to comment.

Sources said last month that Virgin and Tabcorp were in talks on the casino project.

Tabcorp had expected to play a major role in developing and operating the project, which would have retained the Virgin brand.

Tabcorp owns four of Australia's 13 casinos and is looking for growth opportunities after its former takeover target, UNiTAB, merged with Australian lottery operator Tattersall's Ltd.

Recently-listed Melco PBL Entertainment (Macau) - a joint venture of Australian media firm Publishing and Broadcasting and Hong Kong firm Melco International Development (0200) - is planning to build three casinos in Macau.

Macau recently dethroned Las Vegas as the world's biggest gambling center, with analysts predicting its gambling market could more than double to US$14 billion in revenue by 2010.

The only place in gambling-mad China where casinos are legal, Macau opened its doors to international gaming firms such as Las Vegas Sands and Wynn Resorts when a gaming monopoly held by casino mogul Stanley Ho Hung-sun expired in 2002.

Gaming revenues in the mainland enclave have climbed in the past four years, surging 23 percent in 2006 to US$7 billion to overtake the US$6.69 billion of "gaming wins" notched up by the Las Vegas Strip.

With six new casinos scheduled to open this year, the hype surrounding Macau shows no sign of abating.

REUTERS