$3.4 Billion MGM Cotai Grand Opening on February 12
The long-awaited launch of MGM Cotai casino-resort is finally at hand. The $3.4 billion MGM Cotai announced 4 separate delays since 2016, due to construction and licensing issues with Macau officials.
Now, the Las Vegas-based MGM Resorts International is ready to open the doors on one of the grandest integrated casino-resorts in Macau, the world’s largest gambling destination. MGM’s iconic gold lion finally was placed in front of the MGM Cotai on Tuesday night.
Jim Murren, the longtime CEO of MGM Resorts International, said he and his company are taking a “leap of faith” in Macau officials. Casino licenses in Macau sometimes expire in as little as two years. All companies face new licensing in 2020 — and two years is not long enough to pay back construction costs on a $3.4 billion project.
Macau Official’s Licensing Delays
Chinese officials have signaled an ambivalence about Macau’s casino industry over the last 4 years. Xi Jinping’s crackdown caused havoc on Macau stock prices from 2014 to 2016 (and still does, to a certain extent). President Xi himself gave a speech in December 2014, telling Macau’s leaders they needed to diversify their economy away from casinos.
Since then, Macau regulators have caused casino executives heartburn with policies that included cigarette bans and limitations on the number of gaming tables a casino can have. Beijing officials instituted travel restrictions to Macau, limited the amount of cash VIP Chinese customers could carry into the Cotai Peninsula, and put new regulations on China UnionPay credit card and ATM transactions.
Then there are the delays. The first couple of times MCM Cotai was delayed had to do with construction supplies — or at least that was the public story. Then in August 2017, it was announced that the opening would be delayed by damage caused by Typhoon Hato — which killed 10 people in Macau. The January 2018 delay had to do with last-minute licensing issues. All good excuses, but it hurt MGM Resorts share prices each time a delay was announced.
Jim Murren Trusts Chinese Officials
Despite concerning signals, Jim Murren said he trusts officials. MGM Resorts has built a relationship with officials since 2002, when the casino company began its Macau operations. Murren said, “I have no answers but I have a lot of trust. Sometimes you have to have a leap of faith. We feel we are the kind of company that the government would like to see here.”
Murren said some of the delays had to do with adding new attractions, to help Macau’s leaders satisfy Xi’s demands for a diversified economy. In that way, MGM Resorts helps local officials meet their obligations, while also creating a more interesting product for the Chinese mass market visitors. Such customers prefer to bring their families, who can enjoy the shopping, exhibitions, and amenities while their hardcore gamblers enjoy the casino.
MGM Cotai’s Attractions and Amenities
The MGM Cotai should be magnificent to behold. Jim Murren’s company spent $13 million on decorations for the lobby alone, including buying 28 Qing Dynasty carpets and an orb-shaped Swarovski crystal chandelier. Haute couture dresses also decorate the walls.
The complex includes an atrium, luxury shops from the world’s great retail chains, restaurants bearing the names of celebrity chefs, a vast theater, and a “technological sympony”.
100 Gaming Tables and 5 Junket Operators
For the time being, gaming opportunities are more limited than one would expect for a $3.4 billion resort. MGM Cotai will have 100 gaming tables (mostly baccarat), with 77 of those tables coming over from the MGM Macau. None of the gaming tables are for VIPs, though Murren said he expects to have 5 junket operators by the middle of 2018. Junket operators arrange for Chinese high rollers to fly in, while offering credit that casinos do not offer in Macau.
MGM Resorts’ CEO said he expects to hear word on additional gaming tables and junket operators in a few months. Macau Chief Executive Chui Sai-on has said that mid-2018 sounds like a good time to make an announcement. Presumably, Chui Sai-on is not delaying for the sake of drama, but is himself waiting for word from on-high.