Entertainment: Kung Fu Panda and Shrek debut in Macau with DreamWorks, Sands venture

(Reuters) - DreamWorks Animation SKG Inc, the movie studio famous for family films like "Madagascar" and "Shark Tale", has entered into a licensing agreement in Macau, the world's biggest gambling destination, in a push to diversify revenues.

The deal with billionaire Sheldon Adelson's Sands China Ltd allows the casino operator to use characters like Shrek and Po from "Kung Fu Panda" in the casinos as Sands moves to attract leisure and family visitors.

California-based DreamWorks announced the deal on Tuesday with popular franchise characters on display. Guests at Sands' Venetian and Cotai Central resorts will be able to see and interact with the characters during their stays, the film company said. The deal takes effect on July 1.

DreamWorks' venture in Macau may help boost the $2 billion company's efforts in China after it posted its first quarterly loss in almost six years in February.

In an advertising splash, DreamWorks took out three full-page color advertisements on Tuesday in Hong Kong's main English-language newspaper, the South China Morning Post, displaying Po, Shrek, and the animal cast of "Madagascar", asking readers to guess where they were taking their next holiday.

Macau, a former Portuguese colony, is the only place in China where people are legally allowed to gamble in casinos. More than two-thirds of Macau's visitors come from mainland China.

Chinese and Macau government officials have been pushing for casino operators like Sands to diversify their operations to appeal to a more mass-market international tourist destination.

Macau is heavily reliant on the gambling industry, with more than 70 percent of tax revenues coming from the casinos. Tourists come primarily to gamble as opposed to Las Vegas, where shows, fine dining and other forms of entertainment are in higher demand.

Rival casino operators located adjacent to Sands' resorts on Macau's Cotai strip have also been trying to diversify their gambling offerings. Melco Crown Entertainment Ltd, owned by Hong Kong billionaire Lawrence Ho and Australian tycoon James Packer, produces the House of Dancing Water show, while Galaxy Entertainment Group Ltd has a cinema and a skytop wave pool.