For most of the past five years, the Chinese gambling mecca of Macau seemed a sure bet.
The first American company to enter the market was Las Vegas Sands, which opened the Sands Macau casino in 2004 — and earned back its $285 million investment in only a year.
No more. Recession and the global credit crisis and the attitude of the Chines government have stopped the floww.
The latest hard-luck story: MGM Mirage. This week, the Las Vegas-based company disclosed that New Jersey gaming industry regulators object to its Macau joint venture partner, raising the possibility that MGM Mirage could pull out of the market.
MGM Mirage opened the $1.25 billion MGM Grand Macau hotel and casino in 2007 in partnership with Pansy Ho, daughter of tycoon Stanley Ho, who held a monopoly on gaming in Macau for four decades and continues to operate casinos in the city.
(He once served the writer white wine in the Hong Kong Hilton while he, Stanley Ho, was dressed as a French artisto before the Revolution. The wig did not fit well.)
In a filing with the U.S. Securities and Exchange Commission, MGM Mirage said that the New Jersey Division of Gaming Enforcement had deemed Pansy Ho an ‘unsuitable’ partner after a four-year investigation.
While MGM Mirage has been hit by a regulatory bombshell, other Macau casino operators are suffering financial fallout in a market turned cold by recession and an unexpected shift in Chinese policy. The Sands, seen on the right, has not been completed. It may never happen.
Last year, Chinese authorities began restricting the number of citizens who were allowed to enter Macau.
Melco Crown Entertainment, a Nasdaq-listed joint venture between Laurence Ho (Pansy Ho’s brother) and Australian billionaire James Packer, recently reported it lost $35.3 million in the first quarter, compared with a $43.2 million profit in the same period in 2008. It was the fourth straight quarterly loss for the company, which operates Macau’s Altira hotel and casino.
Time Online said the Macau drought could get worse before it gets better. But predicting the future of Macau’s gambling industry is a lot like rolling dice.