long-rumored plan to build a casino in Macau, an Asian gaming market that could rival Las Vegas in scope, has become a reality.
Less than a week after agreeing to purchase
Mandalay Resorts Group
in a cash-and-debt deal valued at nearly $8 billion, MGM announced a joint partnership with Pansy Ho to develop a major hotel and casino resort on the island of Macau, a special administration region of China, 40 miles west of Hong Kong. In reaction, shares of MGM rose 82 cents, or 1.7%, to $48.37.
The Macau venture will use the MGM Grand name and will be jointly operated by MGM and Ho, who is the managing partner of Shun Tak Holdings and is the daughter of Stanley Ho, the octogenarian billionaire who controlled all gambling on the island for the better part of four decades. (For more on Macau, please read
"MGM Mirage Envisions an Oasis in Macau.")
"We are pleased to be entering the Macau market with our partner, Pansy Ho, for whom we have the greatest respect," said Terri Lanni, chairman and CEO of MGM Mirage, in a statement. "We have always said we would like to participate in Macau under the right circumstances."
The move to Macau could prove lucrative. According to estimates from the Innovation Group, a gaming consultancy, Macau's dozen casinos generated $3.5 billion in gaming revenue in 2003, compared with $4.8 billion for Las Vegas, which has 44 casinos on the Strip. But unlike Vegas, Macau attracts high rollers with a taste for table games such as baccarat, and that is why its average table win is $21,500, about 10 times more than that on the Strip.
In December 2002, China broke Ho's monopoly on gaming and opened up foreign investment in Macau casinos. Although it was considered a favorite to win one of the three bids, MGM was shut out, losing to Stanley Ho,
and Galaxy Casinos, a consortium that includes Sheldon Adelson, owner of the Venetian, and some Hong Kong partners.
Since then, MGM has been working behind the scenes to establish a foothold in Macau. In February, Hong Kong newspapers reported that MGM and Ho had reached a $566 million development deal, a report that MGM executives denied.