Inside Asian Gaming

INSIDE ASIAN GAMING | May 2012 16 Cotai’s Next Wave Cotai’s future landscape is taking shape, with construction beginning on Phase 2 of Galaxy Macau and Wynn Macau’s land grant application finally receiving approval. It’s not clear who will get the go-ahead on Cotai next, however, as government appears to want to stagger development in an effort to rein in a red-hot gaming industry W ith Wynn Macau’s Cotai land concession contract receiving official government approval on 2ndMay, the bigquestionnow iswhichother operator—SJM Holdings or MGM China— will get the green light this year to build on Cotai and which will be left waiting. Who’s next? In February, the director of Macau’s Lands and Public Works Bureau, Jaime Carion, indicated his department would likely approve just two of the three Cotai land grant applications during 2012. Following thatannouncement,UnionGamingResearch Macau’s Grant Govertsen succinctly spelled out each operator’s case in a research note: • “ MGM China – In our opinion, MGM China can make at least three arguments as to why they should be included as one of the two operators to receive approval for a Cotai project this year. First, the company has the smallest amount of gaming supply in the market; second, the company has no exposure to Cotai; and third, the company’s concession expires in 2020, which is two years prior to four of the other five operators. • “ SJM Holdings – Like MGM China, we believe SJM can also make at least three arguments for 2012 approval of their Cotai land application. First, the company has no Cotai exposure; second, the company submitted its Cotai application beforeMGMChina; and third, the company’s concession also expires in 2020, which is two years prior to four of the other five operators. • “ Wynn Macau – Again, we can think of at least three arguments that Wynn Macau can make as to why they should also receive Cotai land approval this year. First, the company has noCotai exposure; second, the company submitted its Cotai application before any other operator; and third, the company has the second- smallest amount of gaming supply in the market.” A day after the Wynn announcement, MGM China Holdings announced its first- quarter 2012 earnings (in conjunction with those of its parent company, MGM Resorts