People start to queue prior to the opening of the MGM Grand Macau, 18 December 2007. MGM plans a second casino in Macau with 1,600 hotel rooms, 500 gaming tables and 2,500 slot machines. Photo: AFP/Mike Clarke
The $2.5 billion casino, to be built on the up-and-coming Cotai Strip, which houses rival
casinos including Sands China, will feature 1,600 hotel rooms, 500 gaming tables and 2,500 slot machines, MGM China Holdings said.
The official announcement of the land concession contract, which appeared on the Macau government website, follows figures last week that showed the city's gambling revenue jumped 13.5 percent to a record $38 billion in 2012.
MGM China shares jumped 7.0 percent on the news to close at HK$15.86 on the Hong Kong stock exchange.
The approval was "a very important milestone in the project's development timeline and likely came sooner than investor expectations", Union Gaming Group analyst Grant Govertsen told Dow Jones Newswires.
MGM China Holdings, a tie-up between Las Vegas-based MGM Resorts International and Pansy Ho, daughter of Macau gambling tycoon Stanley Ho, first announced the land concession deal with the government in October but had been waiting for official approval.
The company said the design of the resort was at an "advanced stage" with construction expected to take three years. The land concession contract has an initial term of 25 years.
The new casino project highlights intense competition for the former Portuguese colony's gaming sector, despite the fact that gaming revenue growth has fallen from the stunning highs of the past three years as China's economic boom slows.
Semi-autonomous Macau, the only part of China where casino gambling is legal, overtook Las Vegas as the world's gaming capital in terms of revenue after the sector was opened up to foreign competition in 2002.
Six firms are licensed to operate casinos in Macau, which was handed back to Beijing in 1999.