MGM Resorts International’s Chief Executive, Bill Hornbuckle gave his full insight on the possibility of the Chinese crackdown crimping profits in Macau, and said he does not view it as “a major challenge”.
In an interview with Yahoo Finance released Monday, CEO and president of MGM Resorts International and chairman of MGM China dismissed concerns that China’s new regulatory attempts to exert tighter controls in the gambling enclave would alter growth opportunities in the market.
The concerns come as, after two decades of operating as the gaming capital of Asia and being the only jurisdiction under Chinese rule allowed to operate casinos, Macau’s Secretary for Economy and Finance announced last month that it would begin a review of the casino industry to “tighten government oversight over operators that sent stock plummeting”. Shares of Macau casino operators shed a third of its value, roughly $18 million in one day.
Hornbuckle said the Gaming Inspection and Coordination Bureau (DICJ) oversees operators and officials are present at its two locations, MGM Macau and MGM Cotai. However, recent regulatory actions taken against other industries, including video gaming and private tutoring companies, have raised fears the Chinese leaders are looking to exert greater state control over daily operations as President Xi Jinping preaches the need for “common prosperity”, prioritizing social obligations over profits.
According to Finance.Yahoo.com, Hornbuckle said that “I’m not and we’re not overreacting to what is being hyped or said. We are hoping rational minds control in the end because this is the Macau economy”.
Hornbuckle assured that he is optimistic that authorities will take a more pragmatic approach to regulation, given the fact that casinos stand for 80% of Macau’s economy.
“Local and national officials recognize the value that it brings and ultimately the value that we've brought as operators to the greater community. I mean we do a lot in the community just beyond employment, which is a big piece of it, of course. So I, I think we're all in good standing,” Hornbuckle said.
Last week, Macau's Head of the Government, Hot Iat Seng, stated that the budget would have to be reviewed as the detection of cases in August and September had also frustrated the economic recovery, as the government had forecast to collect about $16.2 billion in gambling taxes this year. August saw a drop in gaming revenues compared to the previous months, and casino stocks dropped in September.
However, MGM is already looking beyond Macau for its next move in the Asian market. Last week, the company was selected - along with its joint venture partner, Orix - by the prefecture of Osaka, Japan, to be the region’s integrated resort partner.
MGM’s proposal for an integrated resort in the area involves 2,500 guest rooms and 400,000 square feet of conference facilities.
“The Osaka and Kansai region itself has 19 million people who live there. If you have the sole license to be able to do this activity in this case for 19 million people, it’s pretty compelling” he said. “In Southern California, which is 30% of our market base in Las Vegas we have over 100 licensees. Think about that”, Hornbuckle concluded.