MGM Mirage Envisions an Oasis in Macau

As rivals bet on the growth of stateside gaming, MGM Mirage (MGG) has turned its eyes abroad, making sizeable international investments that could spur enormous growth. While the upside is great, so are the risks, with MGM Mirage's plans pinned to situations the casino cannot control.

In the U.K., the company wants to build a number of super-sized casinos in the coming years, but needs the Parliament there to deregulate gaming laws to do it. And in Asia, the casino wants to build on the island of Macau, a special administration region of China 40 miles west of Hong Kong, but it needs to find a partner to do it.

Even in a best-case scenario, neither market will affect earnings until 2006, but MGM Mirage's efforts are notable, especially for investors searching for a growth story that may not be factored into current stock prices. The moves are subject to so many variables that MGM Mirage won't even offer estimates or timetables yet.

"This is about long-term growth. I would feel uncomfortable putting specific years on it, but what we're trying to do is be in a position to take advantage of these opportunities as quickly as they come up," said Alan Feldman, senior vice president of public affairs.

Macau: Mini Las Vegas?

And the opportunities are huge. Macau is a market that already rivals Las Vegas despite being a fraction its size. According to Scott Fisher, managing director at gaming consultancy The Innovation Group, the island's dozen utilitarian casinos generated $3.5 billion in gaming revenue in 2003. In comparison, Las Vegas, which has 44 casinos on the Strip alone, generated $4.8 billion during the period.

Macau generates huge revenue from such a small base because it's a haven for hardcore gamblers who prefer high-stakes baccarat to slot machines. As a result of the focus on table gaming, Macau's average daily table win is $21,500, about 10 times more than Las Vegas'.

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