To offset the difficult prospects in Macau, casino owners Galaxy Entertainment Group and MGM Resorts International are reportedly considering expanding into new regions, namely Thailand. According to reports, Galaxy, founded by billionaire Lui Che-woo, is looking into gaming potential in the United Arab Emirates (UAE). These prospective changes come as operators voice fears about Macau’s future, owing to China’s demand for the enclave to shift its focus away from gambling and towards entertainment, as well as heightened monitoring on gaming activities.
Casino stocks benefit from a positive market reaction
The news of possible expansion into new areas has boosted the stocks of both casino companies. In Hong Kong trade, Galaxy’s shares increased by up to 5.3%, while MGM China, a subsidiary of MGM Resorts, increased by more than 6%. This increasing trend also contributed to a 5% increase in Bloomberg Intelligence’s index of Macau casino operator shares.
Concerns Regarding Macau’s Future
The decision to look into alternate markets underscores the operators’ concerns about Macau’s future. Although China’s post-pandemic reopening has resulted in a spike in tourism and a recovery of gaming revenue to about 60% of pre-Covid levels in May, the expected boom may wane as pent-up demand recedes and more Chinese tourists travel abroad. Furthermore, it is believed that it will take years for Macau to build alternative attractions and non-gaming events capable of matching the cash earned by VIP gamblers, who formerly accounted for a sizable share of overall gaming revenue.
Thailand and the UAE are both profitable markets
With the possibility of casino legalization in Thailand and the United Arab Emirates in the future years, operators are eager to obtain a competitive advantage in these expanding markets. If legalization occurs, Thailand, a major tourist destination, particularly among Asian travelers, has the potential to generate enormous gaming revenue. According to Bloomberg Intelligence analyst Angela Hanlee, the UAE could become a lucrative industry, potentially exceeding Singapore’s renowned Marina Bay Sands resort in terms of gaming revenue and producing up to $6.6 billion yearly.
Galaxy and MGM Expanding Their Presence in New Markets
According to sources, Galaxy has already established offices in Thailand and the UAE to promote its Macau activities while gathering vital on-the-ground information. Similarly, MGM, which is planning to oversee an entertainment complex in Dubai, has apparently developed a foothold in Thailand and is working with a Thai parliamentary committee investigating casino legalisation. The House of Representatives approved the committee’s proposal for the building of multiple casino resorts in January.
Financial Strength and Regulatory Changes
While admission into these new markets is predicated on legal restrictions being lifted, the sector anticipates regulatory reforms in the near future. Thailand’s casino resort project has received bipartisan backing, and the next administration is largely likely to accept it. Early negotiations on legalizing gaming have taken place in the UAE, and operators have met with authorities informally. Despite the fact that senior government officials have declared that there are no imminent plans to authorize gambling, industry insiders expect that more advancements will occur in the following months.
Galaxy and MGM are both financially well-positioned for growth. Galaxy’s conservative financing strategy and MGM’s asset-light model, which involves selling properties and then leasing them back, have improved their cash situations. Furthermore, Las Vegas Sands Corp. has already expressed interest in Thailand, demonstrating the industry’s determination to capitalize on the country’s potential market.
Exciting Opportunities on the Horizon
As Galaxy Entertainment Group and MGM Resorts International look to establish casino resorts in Thailand, they hope to navigate the changing landscape of the global gambling industry. With Macau experiencing difficulties, operators can diversify their business and safeguard future growth by exploring other markets. While the future of international casino operations is dependent on regulatory changes and market dynamics, the attraction of unexplored prospects promises an exciting chapter in the domain of international casino enterprises.
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