MGM Resorts Done Building New Casinos, Unless Company Receives License in Japan
Posted on: November 15, 2017, 02:00h.
Last updated on: November 15, 2017, 11:58h.
MGM Resorts has been on a spending spree in recent years, acquiring casino resorts and building others, but that will soon come to an end.
CEO Jim Murren said during the company’s third quarter conference call with investors that the development cycle is nearing completion.
The $3.3 billion MGM Cotai in Macau is set to open in January, the $960 million MGM Springfield is on track to open next fall, and the overhaul of the Monte Carlo is expected to be completed in September of 2018. After that, Murren says the company will halt construction on new facilities.
“That really winds down our development cycle,” Murren told shareholders last week. “We’re spending a lot of money as a company.”
Murren explained that moving forward, MGM will look to overhaul its current Strip properties instead of building new resorts. Investments will be tailored to Las Vegas, the executive stated, where the company makes the majority of its revenue.
“Where we’re focusing our capital is where we dominate, which is here,” Murren concluded.
Murren noted in 2016 that renovations will likely occur at the Luxor and Excalibur in the coming years. Unlike Monte Carlo, which is being transformed into Park MGM and The NoMad boutique hotel, Luxor and Excalibur aren’t expected to undergo rebranding or name changes.
Murren says MGM Resorts won’t be announcing a new casino resort anytime soon unless it’s in Japan. Legislators there are currently crafting a bill that’s expected to authorize two integrated casino resorts.
The world’s major casino operators are all monitoring the potential gaming expansion, as the market is highly desirable and thought to be worth billions of dollars.
Analysts believe Las Vegas Sands and MGM Resorts are the two frontrunners to obtain the coveted licenses. Both companies have vast experience operating in foreign jurisdictions.
Japan’s National Diet is anticipated to release the gaming measure next month, and begin taking bids in 2018. Murren opined this fall that MGM’s investment in Japan might reach $10 billion, and the casino resort could open as early as 2025.
Part of the legislation will dictate where the resorts will be built. Osaka and Yokohama are thought to be the favorites.
MGM bought out Boyd Gaming’s 50 percent stake in the Borgata in 2016 for $900 million, giving complete ownership of Atlantic City’s most profitable casino to the company. It also opened MGM National Harbor, a $1.4 billion casino resort near Washington, DC, last December.
MGM was reportedly in talks with Las Vegas Sands to acquire its Pennsylvania casino in Bethlehem, but the deal fell through this year.
Investment spending for the Monte Carlo project, MGM National Harbor, MGM Springfield, MGM Cotai, and the acquisition of Borgata totals more than $7 billion.
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