MGM takes a huge gamble in Las Vegas

We all like to gamble but not on this scale. MGM Mirage, probably  the largest casino group in Las Vegas has just opened the most expensive casino complex in the world at a time when the Vegas itself is going through an extremely difficult period. The complex known as “ City Center” is scheduled to cost no less than $9 billion will when opened completely cover 18 million square feet, have four hotels with 6300 rooms, 2400 homes, 42 restaurants and bars, ½ million square feet of shopping featuring top brands like Vuitton, Cartier and Gucci as well of course a massive casino. The funding for this project is not only Wall Street but interestingly enough includes Lloyds Banking Group and Royal Bank of Scotland both propped up by the UK taxpayer as well as no less than Sheikh Mohammed bin Rashid al-Maktoum, the ruler of Dubai who is reportedly in for $4 billion. The project which nearly went broke once already is also over budget to such an extent that Sheikh Mohammed questioned the use of so many gold taps and Italian marble. MGM itself who also own the MGM Grand, Mandalay Bay and Bellagio hasn’t made a profit for two years and is $12 billion in debt is facing the fact that rooms and casino in Vegas are empty and property values have been slashed. Head of MGM Mr Jim Murren put a brave face on it by saying “we are not out of the woods” but others who are active in the property market are less convinced, even Donald Trump described the project as “an absolute catastrophe”. Who is right and who is wrong remains to be seen but there will either be some big winners or some big losers; probably the biggest gamble Las Vegas has seen.