MGM Macau just turned ten years old; a celebration was held to honor the 1,900 employees who have been with the casino since day one. MGM Macau has a total of 8,900 employees, but on January 29th, that number is likely to double when MGM Cotai opens. CEO Jim Murren was unable to attend and spoke to the gathered employees via video. He thanked them for their efforts and promised a better world to come. Although the CEO was not there in person, co-chairman of MGM China, Pansy Ho was on hand to thank the employees in person. She said, “Ten years later today, we are in full swing to prepare for the opening of MGM Cotai and our growing team will continue creating unprecedented art and cultural experiences paired with advanced technology.”
Ms. Ho’s presence at the anniversary was significant. Ten years ago, she was considered by MGM to be a very important person, critical in fact, to its efforts in Macau. Pansy is the daughter of the legendary Stanley Ho, the godfather of gambling in the former Portuguese colony. The Ho family had the experience and the contacts needed by MGM. Ms. Ho was eager to step out on her own and work with MGM. To MGM, she was so important that the corporation was willing to forgo its interest in the Borgata resort in Atlantic City to keep her as part of the team.
In 2010, New Jersey gaming regulators thought that Pansy Ho was too closely related to her gangster-connected father. The Casino Control Commission proclaimed Ms Ho to be unsuitable for a gaming license in Atlantic City. MGM was given a choice – throw Pansy under the bus or lose its license in Atlantic City. MGM chose Pansy and Macau over Borgata and Atlantic City. At the time, many of us wondered if MGM was making a mistake. Even though Atlantic City was on a downturn, it was a known commodity. Macau was on an upswing, but it was an unknown and looked a little risky. Both Macau and Atlantic City were undergoing major changes.
By March of 2010, Atlantic City’s revenues had fallen to $3.9 billion from a high of $5.2 billion just four years earlier. The slot machines in Pennsylvania were having a huge impact on Atlantic City, but at that time no one understood just how bad it was going to get. By contrast, Macau’s revenues had risen from $12 billion in 2007 to $28.9 billion in 2016. Actually, revenue in Macau hit $45 billion in 2013, but fell after the “crackdown on crime and corruption” in China. But it is once again in a growth mode. MGM in Macau is not the biggest or the most profitable casino, but it does get significantly more cash flow from Macau than Boyd got from Borgata in MGM’s absence.
In another month, MGM will have a second casino in Macau and will likely get as much cash from two casinos in Macau than from all of the rest of its casinos combined. No one in 2010 could have guessed at the ultimate size of the Macau market or the radical decline in Atlantic City. In retrospect, MGM made the right choice taking Pansy Ho over Borgata. In any case, MGM is back in A. C. In 2017, MGM paid Boyd $900 million for complete control of Borgata. It is still the most profitable casino in Atlantic City. Unlike in 2010, regulators found no problem in approving MGM’s purchase and license. It seems that in the wake of a really bad decade the gaming regulators can’t remember why they did not like Ms Ho. Since Governor Christie took office, regulators have been less difficult to deal with. The Atlantic City revenues have temporarily stabilized, but it is still only half of what it once was. In 2016, casino revenue was down 50 percent from that lofty $5.2 billion of 2006 and there were five fewer casinos. The gaming regulators cannot be blamed for the fall, but the governor and the city’s casinos thought regulators had made the situation worse.
The tenth anniversary of MGM Macau is a significant event for the corporation. However, it will be dwarfed by the impact of MGM Cotai. Pansy Ho certainly deserves some credit for MGM’s success in Macau. The anniversary celebration serves as a reminder of just how much has changed in gaming in the last ten years, both in Macau and Atlantic City.
