Hong Kong-based Galaxy Entertainment Group and Las Vegas-based MGM Resorts International, the two biggest players in the iGaming industry, are currently seeking to open casino resorts in Thailand to prevent worsening operations in Macau.
Pressure on both companies:
The move to expand their presence and enter new markets shows casino operators’ stress over the worsening outlook for the Macau business, which once generated six times as much gaming revenue as Las Vegas and provided historically high returns.
In a related development, those who did not want to be identified because they consider it private said, “Galaxy Entertainment Group and MGM Resorts International are studying the possibility of opening casino resorts in the country. But Galaxy, a gaming, retail and hospitality group dominated by billionaire Louis Chew, is also exploring launching a gaming business in the United Arab Emirates.”
Shares of Galaxy Entertainment extended gains to 5.3% in Hong Kong trading on Friday, while MGM Resorts affiliate MGM China reported growth of more than 6%. It also helped boost the Bloomberg Intelligence gauge on shares of Macau casino operators by more than 5%.
China’s desire to alienate Macau from gambling:
China’s main goal is to move Macau away from gambling and into entertainment, which has strengthened surveillance of gambling activities while cracking down on high-value actors suspected of money laundering.
Although China’s resumption of the Macau border has sparked a tourism boom that brought Macau’s gaming revenue back to nearly 60% of pre-COVID levels in May, such a tourism explosion could potentially fall later this year as pent-up demand subsides and rising flight capacity forces large numbers of Chinese abroad. In addition, it will likely take years for the city to add more non-game attractions and events to attract more visitors to fill the void left by VIP gamblers, who accounted for half of its total game income.
Both operators know that Thailand and the UAE are likely to legalize casinos in the future, so they want to benefit from the aforementioned considerations. Thailand is “one of the world’s top tourist destinations, especially for tourists from other Asian countries,” according to Angela Hanlee, an analyst at Bloomberg Intelligence. During the pre-pandemic period, Chinese accounted for nearly 28% of all foreign arrivals, followed by Malaysians and Indians.