Galaxy Entertainment, MGM Resorts reportedly eyeing expansion into Thailand as Macau outlook deteriorates

Casino operators Galaxy Entertainment Group and MGM Resorts International are reportedly considering the development of casino resorts in Thailand as they seek to mitigate a challenging outlook in Macau, according to media reports. 

Galaxy, controlled by billionaire Lui Che-woo, is also said to be exploring gaming operations in the United Arab Emirates, undisclosed sources told Bloomberg. These plans come as operators express concerns over Macau's declining prospects due to China's push for the enclave to shift its focus from gambling to entertainment and increased scrutiny on gaming activities.

Galaxy boss Lui Che-woo

The reports of potential entry into new markets have had a positive impact on the stocks of the casino operators, with Galaxy shares surging as much as 5.3% in Hong Kong trading, and MGM China, a subsidiary of MGM Resorts, rising over 6%. This upward momentum also contributed to a more than 5% increase in Bloomberg Intelligence's gauge of Macau casino operator shares.

The decision to explore alternative markets reflects operators' apprehension about Macau's future. Although China's post-pandemic reopening has led to a surge in tourism, helping Macau's gaming revenue recover to approximately 60% of pre-Covid levels in May, the anticipated boom may fade as pent-up demand subsides and more Chinese tourists venture abroad. 

Furthermore, it is expected to take years for Macau to develop additional attractions and non-gaming events capable of replacing the revenue generated by VIP gamblers, who previously accounted for a significant portion of total gaming revenue.

MGM Macau

With the potential legalization of casinos in Thailand and the UAE in the coming years, operators are keen to gain a competitive advantage in these emerging markets. 

Thailand, a popular tourist destination, particularly among Asian visitors, may attract significant gaming revenue if the legalization materializes. Similarly, the UAE could also become a lucrative market, potentially surpassing Singapore's renowned Marina Bay Sands resort in terms of gaming revenue and pulling in as much as $6.6 billion of gaming revenue annually, as per Bloomberg Intelligence analyst Angela Hanlee.

According to insiders, Galaxy has already established offices in both Thailand and the UAE to promote its Macau operations while gathering valuable on-the-ground information. 

MGM, set to manage an entertainment resort in Dubai, has also reportedly established a presence in Thailand and engaged with a Thai parliamentary committee exploring the legalization of casinos. The committee's proposal for the establishment of several casino resorts was approved by the House of Representatives in January.

Galaxy declined to comment on its plans, while MGM told Bloomberg that it does not have a base in Thailand and has not engaged with any committee regarding the matter.

Notably, Las Vegas Sands Corp. has also previously expressed interest in Thailand, with CEO Robert Goldstein mentioning the group's eagerness to have a presence in the country during an earnings call earlier this year.

Las Vegas Sands' CEO Robert Goldstein

Financially, both Galaxy and MGM are well-positioned for expansion. Galaxy's conservative financing approach and MGM's asset-light model, involving the sale of properties that are subsequently leased back, have bolstered their cash positions. Meanwhile, Sands' recent sale of its Las Vegas properties has provided the company with substantial funds.

While entry into new markets hinges on the removal of legal restrictions in Thailand and the UAE, the industry anticipates regulatory changes on the horizon. Thailand's casino resort proposal gained cross-party support and is widely expected to be approved by the new government. 

In the UAE, media reports indicate early discussions on legalizing gambling have taken place, and operators have held informal talks with authorities. Although senior government officials have stated that there are no immediate plans to allow gambling, industry insiders predict further developments in the coming months. Additionally, Wynn Resorts is moving forwards with plans for a $3.9 billion resort in the emirate of Ras Al Khaimah that is expected to feature a casino among its offerings.