MGM eyes Thailand casino development amid strong Q2 revenues

MGM China Holdings Limited has reported strong financial results for the second quarter of 2024, revealing a significant surge in net revenues as the company sets its sights on potential casino development in Thailand.

Yesterday, MGM China announced net revenues of HKD7.96 billion (USD1.02 billion) for Q2 2024, marking a remarkable 37% increase year-on-year. The adjusted property EBITDAR reached a record HKD2.44 billion (USD312.7 million), reflecting a 40% rise from the previous year. This growth follows the lifting of covid-19 travel restrictions, which has led to a surge in visitor numbers to Macau, where MGM maintains a market share of approximately 16% with strong margins of 29%.

For the first half of 2024, MGM China’s total revenue reached HKD16.2 billion (USD2.07 billion), a 52% jump compared to the same period last year. MGM Cotai generated revenues of HKD4.70 billion, up 45% year-on-year, while MGM Macau reported HK$3.26 billion, a 26% increase.

This growth trajectory has seen MGM increase its market share from 9.5% in 2019 to 16.5% by June 2024 – ending 2023 with a 14.9% share. This growth was attributed to the company’s “deep understanding of customer preferences and a commitment to enhancing guest experiences”, particularly through the implementation of smart tables, or RFID tables, in its casinos.

During the second-quarter earnings call, Kenneth Feng, president and executive director of MGM China, expressed optimism about the company’s growth trajectory, aligning its offerings with Macau’s vision to become a global tourist destination.

Additionally, MGM Resorts CEO Bill Hornbuckle conveyed optimism about the company’s future, highlighting the continued positive financial results and growth in Las Vegas. He noted that “MGM Macau has become the top producer on the Peninsula side,” a position the company aims to maintain through ongoing investments in its properties. Hornbuckle emphasized the importance of the market’s recovery, stating, “MGM is well above that,” and expressed excitement about the company’s strategic priorities moving forward.

In tandem with its strong performance in Macau, MGM Resorts is eyeing expansion opportunities in Thailand. Hornbuckle confirmed that any bid to develop an integrated casino resort in Thailand would be made through MGM China. He and MGM China chairperson, Pansy Ho, “plan to visit Thailand in August to further explore this opportunity.”

This interest is timely as the Thai Ministry of Finance is expected to release findings from a feasibility study on legalized casino gaming in the coming weeks, which could significantly influence MGM’s decision-making process.

The Thai casino study was commissioned in March, after house members approved a draft Entertainment Complex Bill 253-4 to boost tourism and investment.

Due Wednesday, the report will weigh the economic, social and cultural impacts of legal casinos in the kingdom. It will also recommend a legal and regulatory framework for the industry, including tax rates, license requirements, and restrictions on casino size and operations.

Hornbuckle described Thailand as a “compelling market,” citing the attractive cost of doing business and potential profit margins. Analysts at CLSA estimate that Thailand could develop into a $15 billion market if fully realized, with four of Macau’s six gaming concessionaires reportedly interested in pursuing a license.

The Thai government has proposed to issue between five to eight casino licenses with locations in key economic zones and popular tourist destinations being prime candidates. The licenses will have an initial duration of 20 years, with the potential of renewal every five years.

The Thai Prime Minister, Srettha Thavisin, has been a vocal supporter of casino resorts, viewing them as a way to boost tourism and curb illegal gambling.

The proposed tax rate on gross gaming revenue is set at a relatively low 17%, which, combined with plans for extensive industry development, signals a welcoming environment for investors. Hornbuckle has expressed confidence in the dialogue with the Thai government, stating, “the cost to do business there, the margins that could be had would be compelling”.

MGM Resorts is not only focused on Thailand but is also exploring opportunities in the United Arab Emirates (UAE). The company is involved in a development in the UAE that will feature three MGM-owned hotel brands and is looking to incorporate casino gaming into that project, contingent on local government licensing. Hornbuckle noted the recent issuance of the UAE’s first lottery license as a positive sign for the regulatory environment, stating, “I’m encouraged that the rest of this will roll out as defined now”. Nadia Shaw