March 14, 2019 - 9:50 pm
Updated March 15, 2019 - 1:04 pm
MGM Resorts International said Macau has agreed to extend the gaming license of its China unit by two years, easing some concerns about how U.S. operators would be treated in the Asian gaming capital.
Shares of Macau gaming companies owned by Las Vegas operators rallied on the news.
MGM Grand Paradise, a wholly owned subsidiary of MGM China, will have its license extended to June 26, 2022, MGM Resorts said in a statement Thursday night. MGM China is majority-owned by MGM Resorts.
SJM, the casino operator owned by Stanley Ho, will also have its license extended to 2022.
The licenses held by the two operators were set to expire on March 31, 2020. Now all six Macau operators — MGM, SJM, Wynn Resorts, Las Vegas Sands, Galaxy Entertainment and Melco Resorts — will have their licenses expire on the same date.
“We are grateful for the support of the Macau government to have authorized and extended our sub-concession to now align with the rest of the market,” said MGM Resorts CEO Jim Murren.
MGM Grand Paradise will pay the government of Macau nearly $25 million for the two-year extension. It will also pay SJM $2.5 million. MGM received its Macau gaming license through SJM in 2005.
The Macau government had given little indication about how the gaming license renewal process would work even as the 2020 expiration date quickly approached.
The Chinese enclave has no precedent for renewing licenses since it granted six of them in the early 2000s.
Macau could impose higher gaming taxes, tack on a one-time fee or even possibly offer a seventh license when it begins the relicensing process next decade, said Grant Govertsen, an analyst for Union Gaming.
However, the terms of the two-year extension granted Friday indicate the administration will take a friendlier approach than some anticipated, he said.
“It is a positive sign that the existing concessionaires are still going to be welcomed to remain in Macau and the fees seem pretty modest,” Govertsen said.
Macau also could grant MGM an additional 25 gaming tables for its new Cotai casino following the license extension agreement, Credit Suisse said in a note Friday.
MGM currently has permission for 125 gaming tables at its Cotai resort, which opened 13 months ago. Macau has granted other new properties, including Wynn Palace, rights for 150 tables, the bank said.
The agreement may also enable MGM China to extend or refinance its debt maturing in 2020, Credit Suisse said.
Shares of MGM China rose 52 cents, or 3.5 percent, to $15.20 HKD (Hong Kong dollar). Wynn Macau shares added 34 cents, or 1.9 percent, to $18.06 HKD. Sands China gained $1.15, or 3.1 percent, to $38.30 HKD.
The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson.