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Howard Stutz

Macau curtailing new casino construction

16 March 2010

MACAU -- Macau will continue to regulate the number of casinos constructed in the Special Administrative Region of China.

Macau Chief Executive Fernando Chui, in a public policy address Tuesday, said the entity would only allow new casinos to be built as long as construction plans had already been approved.

For some casino development projects, the government may seek to repeal the land from operators that have not submitted specific project plans.

"Apart from those we have agreed in principle in the past, in construction and those already approved, we will regulate (the building of new casinos) in the future," Chui said at a news conference.

Macquarie Securities gaming analyst Gary Pinge, who is based in Hong Kong, told investors the Macau government may use repossessed land to build smaller sized residential developments targeted at mid to lower end of the property market.

"Other than those casino developments already approved, any further applications for casinos will be tightly controlled," Pinge said in a research note. "We believe that the underlying message is no further casinos will be built on Macau in the foreseeable future."

There are still questions on what Chui's comments mean for specific Las Vegas-based companies that have development projects in Macau.

Pinge said the move could impact companies banking land on the Cotai Strip.

Wynn Resorts has discussed building a casino project on the Cotai Strip on land the company had been allocated, but development plans have not been submitted to the Macau government.

"If taken literally, the policy address could impact Wynn Macau," Pinge said. "Any decision to repeal this land bank would have negative implications on the growth outlook for (Wynn) given lack of exposure on Cotai."

Las Vegas Sands Corp. has submitted design plans for two Cotai Strip sites and has moved forward on some preliminary site development.

"Even if this land was repealed from Sands China, we would not see this as a negative since the company already has close to $7 billion invested on Cotai," Pinge said.