International edition
September 27, 2020

They moved successively to expand their business in the world's top gambling market

Casino giants bet big for Macau's gaming windfall

(Macau).- MGM China Holdings, a Macao casino joint venture between U.S-based MGM Resorts International and the daughter of gaming tycoon Stanley Ho, started the process of retail book building for its (initial public offering) IPO, days after Macao's another major casino operator opened its us$ 1.91 billion casino resort.

A

s gaming revenues in Macao continued to grow at a surprising pace this year, casino giants moved successively to expand their business in the world's top gambling market in Macau, eyeing more profit and market share.

According to documents posted on MGM Resorts' website, MGM China plans to sell 760 million shares at between us$ 1.58 and us$ 1,97 a share, with MGM Resorts International holding 51 % of issued share capital and Pansy Ho holding 29 %.

The IPO, which is set on June 3 and could raise us$ 1.5 billion at the top price, is expected to make Pansy Ho the richest woman in Hong Kong, surpassing his father in market value of assets, as she decided to sell her 20 percent stake in the company to public and another one percent to MGM Resorts as part of deal in the IPO. As for future growth opportunities, MGM China said it will "pursue opportunities externally that present compelling growth prospects...particularly in Cotai."

In a press briefing in Hong Kong on May 19, Pansy Ho said that the progress of MGM China's upcoming Cotai project was pending approval of Macao Special Administrative Region (SAR) Government. "We have been very hopeful that this (approval) obviously could happen within the year," said Pansy Ho.

Cotai Strip, a reclaimed land between Macao's Taipa Island and Coloane Island which several mega destination resorts lie on, is becoming a new battlefield for casino giants to seek further expansion.

Several days ago, Galaxy Entertainment Group (GEG), Macao's another major casino operator, held grand opening ceremony for Galaxy Macao, a us$ 1.91 billion casino resort, the first new resort on Cotai Strip in two years, following Las Vegas Sands's Venetian-Macao-Resort-Hotel in 2007 and Melco Crown Entertainment's City of Dreams in 2009.

Meanwhile, US gaming giant Wynn Resorts also revealed its intention last week to build a second casino resort on Cotai Strip soon. Steve Wynn, Chairman and CEO of Wynn Resorts, said on May 16 that he was expecting the Macao government to approve its application for a Cotai site shortly, adding that the new project in Macao is expected to cost over us$ 2.5 billion.

Macao saw spiraling growth of the gaming industry after opening up the century-old sector to foreign competition in 2002. In 2010, the city raked in us$ 23.5 billion in gambling revenue, about four times more than those of Las Vegas strip. Boosted by high-spending visitors mainly from the Chinese mainland, Macao's gaming sector has experienced a record-breaking streak in monthly revenues so far this year.

According to the latest official figures released by the city's Gaming Inspection and Coordination Bureau, total revenues of Macau 's gaming sector for April this year reached a record high of us$ 2.56 billion.

For the first four months of this year, the figures increased by 43.3 % year-on-year to us$ 9.88 billion, with revenues in March this year surpassing that of the whole year of 2001. As investors have more confidence in Macao's gaming sector, shares of casinos being listed in Hong Kong stock exchange advanced at an even more astonishing pace.

SJM, Macao's leading casino owned by Stanley Ho, has seen its share price reaching a record high of over us$ 2.31 per share last week from us$ 0.58 per share one year ago. The latest figures indicated that SJM recorded a total of us$ 2.33 billion in gaming revenue for the first quarter this year, up 43 % year-on- year.

Meanwhile, GEG has also quadrupled in market value over the past year, reaching an all-time high of us$ 1,97 per share on May 19. "This is a golden opportunity for us to open Galaxy Macao, we are confident," Francis Lui, vice chairman of GEG, told a news conference ahead of Galaxy Macao's opening ceremony on May 15.

Wynn Resorts, which is in the process of opening a headquarters in Macao, held the annual meeting here on May 17, an indication of Macao's importance for the U.S.-based gaming empire. "Frankly, we think of ourselves very deeply as a Chinese company in many respects. Our revenues and the rest of our financial posture clearly indicate that to be so, and that is one of the reasons why we are so grateful and humble to be here," said Steve Wynn at a media briefing before the annual meeting.

As a pillar industry of Macau, gaming sector contributes about 35 % of their income in gaming taxes. According to official figures, Macao's total public revenue for the year of 2010 reached us$ 9.95 billion, with gaming taxes us$ 8.12 billion accounting for 81.6 % of total.

Out of concerns that Macao's overwhelming reliance on gambling may squeeze other local industries and make Macao's economy more vulnerable to gaming-related risks, the government has vowed to " appropriately diversify" the city's economy by consolidating its position as a world-class tourism center.  Casinos moved to diversify, as well, to attract more visitors as competitions for gaming windfall intensified.

GEG, whose 550,000-square-meter casino resort Galaxy Macao opened on Cotai Strip, mentioned less about its casino business. Instead, it promoted heavily three five-star hotel brands and a spectacular 52,000-square-meter Grand Resort Deck with a 4,000- square-meter rooftop Wave Pool, the world's largest of its kind. "We are determined to reshape Macao's hospitality scene and build a new momentum not driven by gaming culture," said Lui Che- woo, Chairman of GEG.

Wynn, who expected the new Cotai project to begin soon, said it will be "a departure in many aspects" from the existing casino resorts. Commenting on the newly-opened Galaxy Macao, Wynn said GEG did "a terrific job", adding that he "saw a couple of things at Galaxy the other day that made me take another look at some stuff that I had drawn myself."

"The pace of things around here and the need to be clever and original and express yourself in new ways has become urgent," said Wynn. "I was very happy to see...Galaxy responded intelligently and clearly to that kind of challenge. As long as that happens, Macao will never be over-built."

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