MGM China’s new Macau integrated resort, MGM Cotai, has been granted 125 new-to-market gaming tables, the government announced overnight, including an initial allocation of 100 tables for its planned opening next Monday 29 January.
The allocation, revealed by Secretary for Economy and Finance Lionel Leong Vai Tac, will see the remaining 25 tables become available to MGM Cotai on 1 January 2019 with Leong stating that the company would relocate another 77 tables to Cotai from MGM Macau.
The figure comes as somewhat of a surprise with analysts across the board tipping an allocation of 150 new tables as recently as last week. It also represents fewer than the 150 previously granted to Wynn Palace and the Parisian, both of which opened with 100 new tables in 2016 with 25 more allocated on 1 January 2017 and another 25 on 1 January 2018 for a total of 2018.
However, the reduced number could also be a result of timing given that MGM’s Macau gaming license set to expire in 2020.
“This presents a conflict for the government in terms of allocating a final batch of 25 tables right on top of the license expiration,” explained Union Gaming analyst Grant Govertsen in a note.
“As such, we think that MGM Cotai will receive confirmation of another 25 tables once the license situation is resolved, which will bring its allocation to parity with the other operators. We expect SJM to face a similar dynamic upon opening of its Grand Lisboa Palace.
“In regards to MGM Cotai, we believe that excess table capacity harvested from MGM Macau on the peninsula, in addition to the new tables being allocated by the government, will be enough to achieve current revenue and cash flow forecasts for the company.”
Govertsen also suggested that the government was likely holding back tables under it table games cap to distribute to MGM China’s fellow Macau concessionaires ahead of 2022, while the prospect of a seventh license being granted in the near future remains alive and well.
“Under the assumption that SJM also gets an initial batch of 100 tables for Grand Lisboa Palace in 2019, and that the government allocates ‘catch-up’ tables to MGM and SJM after the license situation is finalized, this would leave 482 tables in the government’s inventory,” he said.
“We think the government could also allocate some number of tables to Melco after opening its Morpheus project at City of Dreams this summer, and to Galaxy as it brings online parts of its Phase 3 and 4 developments. Sands China’s Londoner project could also be eligible for a table allocation.
“However, given that there could be a fair amount of tables leftover even after some modest allocations to the above projects, this is likely to fuel continued speculation of the so-called seventh gaming concession that could be part of the rebid process. Further, we think it is more likely than not that the government keeps the table cap in place post 2022 and maintains a similar growth rate in allowable new tables.”
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