2010 CityCenter, Macau may determine gaming's future

December 22, 2009 4:01 AM
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As the new year approaches, investors are focusing on three major gaming companies whose activities include both Las Vegas and Macau.

In Las Vegas, the concern is the $8.5 billion, 6,000-room CityCenter, co-owned by MGM MIRAGE Inc. (MGM) and financially-troubled Dubai World. The consensus seems to be: As CityCenter goes, so goes Las Vegas.

In Macau, the Chinese enclave that already has surpassed Las Vegas as the world’s leader in gambling revenues, concern centers on the local and national governments.

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Analysts have already warned that high-scaled CityCenter will be very attractive in the near term, thus providing major competition for Wynn Resorts Ltd. (WYNN) and the two properties – The Venetian and the Palazzo – owned by Las Vegas Sands Corp. (LVS). The competition could also affect MGM’s Bellagio and Mirage.

Also, the additional rooms joining an already recession-affected industry will dampen any hopes other properties on the Las Vegas Strip, such as Harrah’s Caesars, Bally’s and Paris, had of slowly increasing room rates as the recovery takes hold.

Over the past weekend, China’s leader, Hu Jintao, attended the festivities held in Macau to mark the enclave’s 10-year anniversary of it being returned to Chinese rule from the Portuguese.

The visit provided President Hu with an opportunity to see first hand the impact gambling properties built and operated by WYNN, LVS and MGM have had on the community. He will view Macau’s glitzy casinos and hotels that have attracted more than 23 million visitors this year, at least two-thirds of them from mainland China.

In his hands is the power to permit the flow of traffic or to reduce the number of Chinese visitors by curbing the number of travel permits.

Also being watched closely is Macau’s new chief executive, Fernando Chui. Although expressing some sympathy toward casino operators, Chui has promised to diversify Macau’s economy within the next five years.

In his anniversary speech, Chui promised "to actively develop the appropriate diversification of the economy. While enhancing regulations on the gaming industry, we will also put emphasis on the convention, exhibition, logistics and cultural industries… (to) focus on the upgrade and transformation of traditional industries."

Meanwhile, in Las Vegas, Harrah’s Entertainment Inc. hopes to restructure its burdening debt load while seeking to take over debt-ridden Planet Hollywood, and Boyd Gaming Corp. (BYD) has bid $2.45 billion for bankrupt Station Casinos Inc. with plans to pay for the purchase with a credit line that was supposed to be used for the construction of Echelon on the site of the former Stardust Hotel/Casino.

Question? Comment? E-mail me at: Ray Poirier

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