Atlantic City – No longer content with building a mere casino, gaming giant MGM Mirage Inc. plans to develop a mini-city of gambling, hotel towers and luxury condominiums that would dramatically redefine the Atlantic City skyline.
The estimated USD 4.5 billion to USD 5.5 billion project would mimic the company’s huge USD 7.4 billion CityCenter project under construction on the Las Vegas Strip, although on a smaller scale, according to people familiar with the plans.
MGM envisions a casino complex featuring three hotel towers of 1,000 rooms each and high-end retail on par with the acclaimed Forum Shops at Caesars Palace in Las Vegas. In addition to its mammoth size, what would distinguish the MGM project from other Atlantic City casinos are plans for posh condos that would start at USD 1 million and top out between USD 5 million and USD 6 million, officials said.
MGM‘s board of directors may give the development the green light when it holds its next meeting, reportedly Tuesday. In February, the board approved USD 20 million to design a project that would rise on 70 acres next to Borgata Hotel Casino & Spa in the Marina District.
MGM is a 50-50 owner of Borgata with Boyd Gaming Corp., but the company has been tantalizing Atlantic City for the past decade with plans for a separate megacasino that would rival anything on its home turf of Las Vegas.
Ritzy Las Vegas casinos owned by MGM include Bellagio, The Mirage, MGM Grand and Mandalay Bay. While those casinos are stunning in their own right, MGM‘s masterpiece is the CityCenter project – billed as a gambling megalopolis or „a city within a city.“ It will include a casino hotel of 4,000 rooms, two nongaming boutique hotels, 470,000 square feet of retail and entertainment space and nearly 2,700 upscale condo units. Completion is targeted for late 2009.
MGM would like to use the Las Vegas development as a model for a „CityCenter East“ project in Atlantic City. Construction is tentatively scheduled to begin in fall 2008 and take about three and a half years to complete, according to people briefed on the plans.
The three proposed hotel towers would each serve a distinct market, from mid-tier customers all the way up to the creme de la creme of high rollers. The condos have been discussed as a possible second phase. A 20,000-seat entertainment arena also was considered but has since been struck from the development.
Gordon M. Absher, MGM Mirage vice president of public affairs, declined to discuss details of the project or even confirm that the board of directors would be meeting next week.
„We’re very excited about the possibilities in Atlantic City and to continue along the vein of what Borgata has started and proved to be successful in that market,“ Absher said.
Dennis M. Farrell Jr., a gaming analyst for Wachovia Capital Markets, believes MGM‘s project would continue Atlantic City’s evolution from a modest gambling haven to a more upscale tourist destination offering an array of casino and nongaming attractions.
„It’s a transforming event for the marketplace,“ he said. „It will grab another segment of clientele that the market has been lacking for some time – the high-end residential customer. You’ll probably get more VIP gaming in there, as well. It will help Atlantic City become the destination marketplace that it is striving for.“
Farrell said the existing casinos should not fear such a formidable new rival because MGM‘s development will have broad-ranging benefits to expand the entire market, including the possibility of more airport service.
„Nongaming businesses will benefit from that type of facility as well,“ Farrell said of casino vendors and suppliers. „It’s going to be a big boost for the local economy.“
If built, the MGM project would roughly coincide with the arrival of two other proposed casinos. Revel Entertainment Group has started preliminary construction on an estimated USD 2 billion gaming resort scheduled to open in 2011 next to Showboat Casino Hotel. Pinnacle Entertainment Inc. is redeveloping the site of the old Sands Casino Hotel for a USD 1.5 billion to USD 2 billion casino that may open in 2011 or 2012.
„I think it’s very exciting,“ New Jersey Casino Control Commission Chair Linda M. Kassekert said of MGM‘s plans. „As we have discussed, Atlantic City is really ready to take the next step in becoming a destination, and this is taking us in the right direction.“
Despite growing optimism over MGM‘s project, the company’s track record in Atlantic City includes unfulfilled promises for two other casinos within the past decade. It once planned to build a lavish gaming resort on barren land in the South Inlet, only to kill that project to focus on the Marina District. Plans for the Marina then failed. Now MGM is resurrecting the Marina District site for its latest development.
MGM is flush with cash for new projects, thanks in part to a USD 2.7 billion investment in the CityCenter project by financing partner Dubai World, an entity of the United Arab Emirates government. Dubai World also has agreed to buy as much as USD 2.4 billion of MGM‘s common stock.
However, MGM‘s plans for Atlantic City could be affected by uncertainty over the Casino Control Commission’s pending vote on the company’s partnership for a new casino in the Chinese gambling enclave of Macau. Critics claim the partnership with Pansy Ho, the eldest daughter of Macau casino mogul Stanley Ho, should be denied because of Stanley Ho’s reputed ties to Asian organized crime.
Kassekert’s agency must vote on the Pansy Ho-MGM venture because MGM Mirage holds a New Jersey gaming license. The New Jersey Division of Gaming Enforcement is investigating the partnership and will make recommendations to the commission on whether the deal should be approved.
Although the commission’s denial of the partnership is not expected, should that remote possibility occur, MGM theoretically could surrender its New Jersey gaming license and walk away from Atlantic City in order to concentrate on Macau.
Gaming regulators in Mississippi and Nevada have already given their approval for the Macau partnership. Pansy Ho has repeatedly denied that her father would be involved in her project with MGM.