MGM Makes Well-Timed Move

MGM Mirage's(MGM Quote) announcement of a $5 billion casino development in Atlantic City just happens to come as the company is in a standoff with the city over licenses in Macau.

On Wednesday, the Las Vegas-based casino operator said it plans to use 72 acres of land it owns in the New Jersey gambling mecca to develop a massive resort. The news should be welcome to Atlantic City, which is struggling with declining revenues because of increased competition from nearby Pennsylvania and New York.

But MGM's development -- long expected by casino insiders -- also could provide a special benefit to the company. Some industry watchers are wondering whether the timing of the announcement is designed to pressure New Jersey state regulators to speed up the much-delayed approval of the company's license to operate a casino in Macau, the region of China that is the world's largest gambling market.

The speculation is that MGM is dangling this $5 billion project in front of regulators as a way of saying, "We better get this Macau license, or we won't build the new project in Atlantic City," says one gaming industry source who closely follows the market.

Since MGM operates casinos in the U.S., it must get clearance from local regulators to operate a Macau casino. While Nevada and Mississippi have given the green light for the Macau license, New Jersey casino regulators have been investigating MGM and its Asian partners for more than a year.