MGM's Sinking Feeling

(Bloomberg Gadfly) -- Sometimes, a rising tide doesn't lift all boats.

Macau's gross gaming receipts increased by 16 percent to 21.4 billion patacas ($2.7 billion) in September, the region's Gaming Inspection and Coordination Bureau said on Sunday, as high rollers roar back and tourists flow in ahead of China's Golden Week holiday.

But relatively lost in the celebrations of 14 straight months of growth in the world's largest gambling hub was news Friday that MGM China Holdings Ltd. will postpone the opening of its newest casino in Cotai to early 2018 from the second half of 2017. Part of the holdup is damage from August's Typhoon Hato.

Construction delays and weather problems are common in big real estate development projects. But the several-month setback could cost MGM more than investors think.

For one, casino fortunes in Macau often rely on a cash spigot controlled by Beijing. Funds ebb and flow on the whim of Chinese authorities, whether it's aimed at controlling capital outflows or limiting conspicuous consumption.

That makes it crucial for operators to do everything they can to sop up winnings when the tap's on: There's no telling when it may shut

Wynn Macau Ltd., Sands China Ltd. and Melco Resorts & Entertainment Ltd. are raking in the spoils, thanks in part to new properties along the Cotai strip.

While some operators are benefiting from an increase in credit provided to VIP players, many are getting an extra bump from visitors wanting to try their luck at fresh, shiny casinos such as Sands Parisian, which boasts a 525-foot replica of the Eiffel Tower, or Wynn Palace, which ushers guests into the resort via cable cars that rise above a synchronized fountain show.

Macau casino stocks also tend to rally around new openings.

After running as a pack for years, Macau casino operators' revenue has decoupled recently, with those opening new properties racing ahead of others like MGM China. Metrics such as VIP table drop and mass market gaming show a similar trend.

What is consistent is that pretty much no player is making progress on a collective promise to increase the share of non-gaming revenue through entertainment, food, retail and other attractions.

Non-gaming revenue has been flat for years at MGM China, which has said it's staking a comeback on attracting mass-market customers.

Any recovery could be further impacted by another unknown factor -- how many new casino tables Macau's government will allow at MGM's latest property. 

Sands and Wynn were permitted 100 new tables each when they opened their respective projects, requiring tables to be moved from older properties, cannibalizing revenue. MGM had just 415 of Macau's 6,413 tables in the second quarter, versus Galaxy at 1,200, and Sands at 1,600.

MGM Cotai's 1,400-room hotel and 2,000-seat theater will help draw guests when the new resort eventually opens, especially if that's in time for Chinese New Year in February. But for MGM, every added delay makes edging its way back into the winner's circle increasingly difficult.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

1. MGM's website still says the property will open in the second half of

To contact the author of this story: Shelly Banjo in Hong Kong at sbanjo@bloomberg.net.

To contact the editor responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net.