MGM Resorts International hopes to be able to soon become one of the beneficiaries of a casino land rush located in Macau following the approval of its rival Wynn Resorts Ltd. They received the approval earlier in the week to allow them to build a major casino within the gambling enclave. The Chief Executive for MGM Jim Murren stated that he believes that the Macau government will soon approve the company’s plans to spend around $2.5 billion to build the casino in Macau’s Cotai district. He later showed drawings of the casino plans which feature expansive towers that are designed to look like stacks of Chinese jewelry boxes. These drawings have not been made public.
This planned investment by the United States casino operators is part of the big rush to stake a claim in the city of Cotai, the new center of growth in the booming Macau and home in Las Vegas. The Sands Corp’s Venetian Macau casino and resort is on the list. After the initial burst of excitement and opening, the government is going to stop approving any new projects in the area, making any of the would-be builders, including those at MGM, Macau gambling president Stanley Ho and Wynn to wait for years and year for any approval at all. Now the tables could be turning after Wynn resorts made the statement earlier this week that they have won the approval from the Macau government to build their new casino. Analysts fully expect that Wynn will spend close to $4 billion on this new resort, which is going to open in around 3 years. The company then went on to state that the project’s budget is currently under review.
"The recent announcement of Wynn bodes very well for MGM," Mr. Murren. The gambling revenue in Macau where it is the only place where gambling is legalized in China, increased up to 42 percent the last year, and over $33 billion, or more than five times that of the Las Vegas Strip according to the government’s data. The deal that was made allowed MGM to have 51 percent of the venture, which is up from 50 percent. Stanley Ho also agreed to sell a large portion of his daughter’s 50 percent stake in his company in the June offering on the Hong Kong Stock Exchange. This left her with only 27 percent of the company. This agreement however, gave MGM more control over their venture and also allowed MGM to consolidate their earnings into the balance sheet. Mr. Murren explained why he did this deal to begin with: "I had the vast majority of my net worth tied into one stock, and I saw our stock go from $100 to $2," Mr. Murren said. Ms. Ho could not be reached in order to speak about the newly created agreement.
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