MGM Resorts International said late Thursday it extended its license agreement for its two Macau casinos until June 26, 2022, to bring the company in line with the Special Administrative Region’s other license holders.
In an agreement with the Macau government, MGM Resorts will pay $25 million to extend the license out by 27 months. All three Macau gaming concessions – Wynn Resorts, Galaxy Entertainment and SJM – and the three sub-concessions – MGM, Las Vegas Sands and Melco – now expire in 2022.
It is still unclear, however, what the relicensing process in Macau will entail.
“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,” MGM Resorts Chairman and CEO Jim Murren said in a statement.
MGM operates two casinos in Macau – MGM Macau and MGM Cotai – in partnership with Pansy Ho, a Hong Kong businesswoman and daughter of Stanley Ho, Macau’s sole casino operator prior to 2003.
Union Gaming Group analyst Grant Govertsen, who is based in Macau, the uncertainty of the licensing situation in Macau will continue to overhang MGM and other operators.
“Simply put, we believe the extensions have more to do with making the ultimate task of the license rebid situation easier, while at the same time making sure the labor market remains stable,” Govertsen wrote in a note to investors Thursday night.
Macau’s gaming market rebounded over the last two years after an economic nose dive caused casino industry revenues to decline 36 percent starting in 2014. Analysts don’t believe the market is in for another major fall, but cautioned the country’s slowing economic growth and the China-U.S. trade war has prevented stronger gains.
Macau casino revenue fell 5 percent in January, the first year-over-year decrease since July 2016, but rebounded in February to a 4.4 percent increase.
Macau gaming revenues grew 14 percent in 2018 to $37.6 billion, far below the market’s apex of $45.1 billion in 2013.
