MGM Resorts International said Macau has agreed to extend the gaming license of its China unit by two years, easing some concerns about how U.S. operators would be treated.
Shares of Macau gaming companies owned by Las Vegas operators rallied on the news.
MGM Grand Paradise, a wholly owned subsidiary of MGM China, will have its license extended to June 26, 2022, MGM Resorts said in a statement Thursday night. SJM, the casino operator owned by Stanley Ho, also will have its license extended.
The licenses were set to expire on March 31, 2020. MGM China is majority-owned by MGM Resorts.
The licenses will now expire at the same time as the other four Macau operators, including Wynn Resorts and Las Vegas Sands.
“We are grateful for the support of the Macau government to have authorized and extended our sub-concession to now align with the rest of the market,” said MGM Resorts CEO Jim Murren.
MGM Grand Paradise will pay the government of Macau nearly $25 million for the two-year extension. It will also pay SJM $2.5 million. MGM received its Macau gaming license through SJM in 2005.
The Macau government had given little indication about how the license renewal process would work even as the expiration date quickly approached, worrying some investors.
The Chinese enclave’s administration could announce higher taxes, tack one a one-time fee or even possibly offer a seventh license when it begins the renewal process, said Grant Govertsen, an analyst for Union Gaming in Macau.
The two-year extension and accompanying fee may indicate the administration will take a friendly approach, he said.
”It is a positive sign that the existing concessionaires are still going to be welcomed to remain in Macau and the fees seem pretty modest,” Govertsen said.
Shares of MGM China rose 84 cents, or 5.7 percent, to $15.52 HKD. Wynn Macau shares added 68 cents, or 3.8 percent, to $18.40 HKD. Sands China gained $1.05, or 2.8 percent, to $38.20 HKD.