MGM Mirage Sends Mixed Signals Over Future

Global Gaming Development will concentrate on the international gambling aspects for the casino operator.

MGM Mirage continues to seem uncertain as to which direction the company is moving toward in planning for the future. The giant casino operator has undergone a trying last year financially, and whispers of liquidity problems that might force bankruptcy have floated around the company.

Even as the company turns to Dubai World to increase its investment in MGM Mirage and give the business breathing room, the president and CEO of MGM Mirage Hospitality, Gamal Aziz, announced the creation of a gambling division within his international hotel branch of the parent company.

Global Gaming Development will concentrate on the international gambling aspects for the casino operator. The first project under Global Gaming will be the development of the MGM Grand Ho Tram, a partnership project to build a resort-casino with Vietnam. The complex, which will be located eighty miles from Ho Chi Minh  City, will host a casino, 1100 hotel rooms, shops and restaurants.

Meanwhile, MGM Mirage is struggling to complete its CityCenter complex on the Las Vegas Strip. Credit to borrow the cash necessary to finish the massive structures has been hard to locate, and Dubai has been forced to raise its stake in MGM to keep the company from perilous conditions.

Further, Dubai World is the financial arm of the country of Dubai, a Muslim country which follows strict religious laws forbidding gambling. At the time of Dubai World's original investment, speculation was that the formation of MGM Mirage Hospitality, the infusion of cash by Dubai, and the planning of hotels in Arab countries signalled a move away from casinos and gambling by the company.

Yet, the new plans in Vietnam and the creation of Global Gaming Development seem to indicate gaming will still be a major part of the MGM brand, just perhaps tucked away in different divisions to allow its partners to obey the letter of the law.

The resignation of longtime CEO Terry Lanni under accusations of academic fraud recently has not helped stabilize the company, nor has the debacle suffered by principal owner Kirk Kerkorian in his investment in Ford Motor. By using his MGM Mirage stock to secure his loans to purchase Ford shares, Kerkorian has put MGM at risk, as the sale of the Ford stock returned fractions of his purchase price.

Even though a return to gaming may be the best play for MGM Mirage, the company has a ways to go before security and stability once again are hallmarks of the company.