Macau casino operators welcome new tables but analysts fear oversupply

TAGs: gaming table cap, Macau, Melco Crown Entertainment, Studio City

melco-crown-studio-cityMacau casino operator Melco Crown Entertainment’s new Studio City resort could be allotted more gaming tables than expected, but not everyone’s convinced that’s a good idea.

Until recently, expectations were that the movie-themed Studio City (pictured) would be allotted only about 150 new gaming tables when it opens on Oct. 27. That’s the same number of tables that Galaxy Entertainment Group’s Galaxy Macau Phase 2 received when it opened this spring.

Both casino operators had expected 400 or more new tables apiece but Macau’s government said it was sticking to its plan to allow only 3% compound annual growth in the total number of gaming tables until 2022. Not shy about expressing his dismay, Melco Crown CEO Lawrence Ho had warned that his company would rethink its future commitment to non-gaming amenities if it didn’t get a sufficient number of new tables.

Late last week, multiple analysts began reporting rumors that Studio City would receive between 200 and 210 tables when it opened and a further 40 to 50 tables before the year was through. Daiwa Securities also reported that Galaxy was in talks to receive 50 more tables this year plus another 50 early in 2016, putting its Phase 2 on par with Melco Crown’s new allotment.

If true, the rumors will likely lead to champagne corks popping at Wynn Resorts, which is scheduled to open its new $4b Wynn Palace property in Q1 2016. MGM Resorts, whose MGM China offshoot will launch its second Macau casino later in 2016, will also be buoyed by the belief that they will share in the new table bounty.

But Daiwa warned that these celebrations could be short lived. Given Macau’s 16-months-and-counting revenue slump, Daiwa believes that the unexpected increase in the number of tables “is actually an incremental negative for the industry as a whole.”

Daiwa noted that Galaxy’s Phase 2 opening had precipitated “a significant decline in minimum bets” as supply outstripped demand. With its slump showing no signs of abating, Macau has moved from a perpetually standing-room-only market to one “increasingly skewed by peak seasons ,with visible weakness pre- and post-peak periods,” such as the recent Golden Week holiday. All these new tables “should thus intensify competition, especially during trough periods.”

Regardless, Melco Crown is tapping songstress Mariah Carey to perform at its grand opening this month. Carey is currently dating Melco Crown co-owner James Packer but she isn’t doing the gig out of love, reportedly commanding a “high six-digits” payday for showing up at her boyfriend’s bash. TMZ reported that director Martin Scorsese and actors Robert De Niro and Leonardo DiCaprio – who collaborated on a short film promoting Studio City – will also be in attendance.


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