Macau Allocates 250 Gaming Tables to Melco's Studio City

  • Melco had wanted 400 tables for casino opening Oct. 27
  • Allocation at upper range of 200-250 tables seen by analysts

Gaming machines inside the Studio City casino resort in Macau.

Photographer: Xaume Olleros/Bloomberg

Melco Crown Entertainment Ltd. will be allowed to operate 250 gambling tables at a new $3.2 billion casino-resort that will open next week, in line with analyst estimates though far fewer than Chairman Lawrence Ho said he was expecting.

Macau’s government has authorized it to operate 200 gaming tables and 1,233 gaming machines upon the opening of Studio City, with the remaining 50 tables to start operation from January 2016, the U.S.-listed casino operator said in a statement Tuesday. Ho said in August he would be “very concerned” if the project doesn’t get the 400 tables it had sought.

Table allocations have become a heated issue between Macau and casino operators spending billions on new resorts in the world’s largest gambling center. Las Vegas tycoon Steve Wynn criticized the government last week for delays in giving out such figures, then Macau fired back days later saying casinos must fully comply with its rules. Melco will receive 100 more tables than Galaxy Entertainment Group Ltd. did for its two projects that opened in May.

"Two hundred and fifty tables is a big allocation. No one should have been expecting 400," said Tim Craighead, director of Asia research for Bloomberg Intelligence. The non-gaming attractions at Studio City play into "Macau’s desire to diversify beyond the casino floor."

Melco shares fell 0.8 percent to $17.30 on Tuesday in New York. The shares have declined 32 percent this year. The Hong Kong Stock Exchange, where other Macau-based casino operators are listed, isn’t open today due to a public holiday.

Reduce Casino Reliance

Macau’s government is seeking to broaden the economy and appeal to mainstream consumers for entertainment and shopping, much like Las Vegas has done. China President Xi Jinping in December ordered the city to reduce its reliance on casinos, an industry that makes up about 80 percent of its revenue.

The Melco allocation is in the range of expectations for between 200 to 250 tables, according to a survey of five analysts by Bloomberg News.

“It’s more tables than expected. It’s definitely positive from an investor’s point of view,” said Grant Govertsen, an analyst from Union Gaming Group, who had predicted Melco will receive 200 tables. “Studio City checked all the right boxes in terms of all the non-gaming amenities that the government is looking for.”

The allocation could affect Melco’s debt. The company has loans that require it to have 400 tables by Oct 1, 2016, according to Standard & Poor’s.

Engage Lenders

Studio City “intends to pro-actively engage” lenders under the project’s senior credit facilities to discuss amending its loan terms to reflect the lower number of tables allocated, Melco said Tuesday.

Studio City also has two bonds outstanding totaling $1.8 billion, one due in 2021 and another in 2020. One bond was 0.2 cents on the dollar higher this morning, according to Bloomberg-compiled prices.

Other companies affected by gaming table decisions are Wynn Macau Ltd., which is scheduled to open its the $4.1 billion Wynn Palace project in March, and Sands China Ltd.’s Parisian Macao, targeted for a summer 2016 debut, they said. Both companies are awaiting allocations.

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