Will the Government Stifle Growth in the Gambling Capital of the World?
Wynn Resorts’ (NASDAQ:WYNN) Hong Kong-listed subsidiary won approval for its new casino in Macau last week after a long wait, but experts believe the government of the Chinese-controlled region will continue to exert strict control on the industry.
Wynn received official approval for its new resort 51-acre project on the Cotai strip after months of wait. Land rights in the region become official only once they have been published in Macau’s gazette. However, according to Union Gaming analysts, this process of ‘gazetting’ the draft land concessions often delays projects for months.
According to analysts Grant Govertsen and Felicity Chiang, the Macau government does not want to allow more than two new Cotai resorts to come up in a year. And “the simplest way of spreading out the timing of development will be the rate at which various approvals are given,” they write. “Other approvals (e.g. architectural design, utility placement, construction labour) will likely be used to further manipulate the timing of new casino openings.”
The new Wynn resort is expected to be completed by 2015, and will have 1,500 hotel rooms and 500 gaming tables.
MGM China Holdings, a joint venture of MGM Resorts International (NYSE:MGM) and a local investor, and SJM Holdings have also submitted applications to build new casinos on the Cotai strip.
SJM, one of six licensed gaming operators in Macau, is the region’s largest casino operator by revenue and owns a third of its gambling market. However, its absence from the now-popular destination Cotai strip has hurt it lately. The Cotai strip is popular for its casinos owned by Galaxy Entertainment and Melco Crown (NASDAQ:MPEL).
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