Vegas Gaming Company Considering Projects in China
LAS VEGAS (AP) _ Less than a week after MGM Grand Inc. announced it was bringing a bit of New York to the Las Vegas Strip, the company says it might export a taste Vegas to China.
The company said Tuesday it has reached a memorandum of understanding with the Hainan Provincial People’s Government of the People’s Republic of China to explore development of two entertainment properties in Hainan Province.
Hainan is a large lush South China Sea island and one of China’s so-called special economic zones designed to lure foreign investment. The government has long hoped to convert it into an alluring resort paradise for tourists.
Still, the introduction of officially sanctioned gambling in China, which Mao Tse-tung banished in the 1949 Communist revolution, is a politically sensitive issue. MGM didn’t specify whether gambling would be allowed.
Robert Maxey, president and chief executive officer of MGM Grand, said in a telephone interview that gambling would be a consideration in any development. But he suggested there might be ″limitations″ on who could gamble.
″Certain forms of gaming are contemplated and under the current status of our understanding, limitations would apply, including (gaming) being available to foreign passport holders only,″ Maxey said.
China is one of the fastest growing economies in the world and represents an enormous potential market for gambling businesses. Gambling resorts on Hainan also could draw high-rollers from Hong Kong, Japan, Taiwan and other affluent Asian economic strongholds.
Maxey, who conducted the negotiations for the company, said the project’s scope ″will be measured in the hundreds of millions of dollars.″ He said the bargaining had been ″very productive and straightforward.″
The memorandum grants MGM Grand the exclusive right to build two resorts. It’s effective for six months.
One of the resorts would be located near Haikou, the provincial capital, and would be marketed to residents and visitors of Haikou. The other resort would be built near the city of Sanya, the southernmost city on the island, and would be marketed as an upscale destination for tourists.
Steve Eisenberg, gaming analyst for Oppenheimer & Co. Inc. in New York, called MGM’s effort a smart decision.
″This early move is aimed at securing a position in one of the fastest- growing markets in the world,″ Eisenberg said Tuesday. ″It’s one of the most intelligent moves they could make.″
MGM is one of the most expansion-minded gaming companies in the business. It announced last Thursday plans to build a $300 million, 1,500-room resort on the Las Vegas Strip named NEW YORK-NEW YORK. It will be built around a replica of the New York skyline, including the Statue of Liberty, Empire State Building and Coney Island.
The NEW YORK-NEW YORK project is scheduled to open in 1996 and is a joint venture with Primadonna Resorts Inc. It will be built across the Las Vegas Strip from the MGM Grand Hotel & Theme Park, which opened Dec. 18. The 5,004- room hotel is the world’s largest.