After casinos in Macau suffered eight straight months of gaming revenue declines, MGM Chairman and CEO Jim Murren doesn't see stability in China any time soon.
Making matters worse is Beijing's crackdown on corruption in the industry, which has sent investors and gamblers alike scrambling for cover.
"I don't think that volatility is going away near-term," Murren said in an interview on CNBC this week. "This year is uncertain."
The Chinese government's shifting attitude towards gaming has put pressure on casinos that rely on revenues from VIP high rollers. That pressure was evident both in the latest Macau gaming revenue data, and in MGM's latest quarterly report, released on Feb. 17.
Over the past eight months, total gaming revenue in Macau has declined on average by more than 14 percent when compared with that of the prior year.
That dynamic spilled over into MGM's performance. The company saw net revenue from its MGM China unit plunge by 22 percent in the fourth quarter of 2014. The biggest declines came from revenue generated from VIP table games, which dropped 39 percent in the quarter.
On CNBC's "Fast Money, " Murren addressed the cold streak in Macau's VIP business. "We are very confident of Macau's long-term potential," he said, "but the VIP business, the high-end business, has been really suffering from the corruption crackdown in China."
Better off in Vegas?
What was once a bounty has now become a millstone for big gaming companies. According to OptionMonster.com co-founder Jon Najarian, "The former driver for MGM and other casinos in China is now the anvil around their necks."
For his part, Murren said that while the company's overall China operations outperformed other operators in the region for the full year, "that still doesn't make it feel any better." Acknowledging the near-term uncertainty in Macau, Murren said his company, along with other concessionaires in the region, is taking a "longer-term view" in the region.
At least for now, that longer-term view means that MGM is proceeding, albeit carefully, with Macau expansion plans. On the company's fourth-quarter earnings call, Murren said that "MGM Cotai construction is progressing really well." Murren also said MGM Diaoyutai, the company's joint venture in Chengdu, was making "great progress."
The dour outlook in Macau hasn't dampened enthusiasm for its stock among analysts, however. Analysts at Stifel Nicolaus said in a research note this week that "despite the challenges in Macau, MGM remains one of our favorite stocks due to its outsized exposure to Las Vegas."
MGM's Las Vegas revenue was in line with analyst expectations for the fourth quarter, with revenue per available room, a key operating metric, up by 7 percent.
Najarian said he liked the casino sector now, as "Vegas remains strong and should gain momentum from Americans saving money on energy."
Murren acknowledged to CNBC the strength of Sin City revenues. "We had the best January in our company here in Las Vegas since 2007," he said. "Las Vegas is lifting off, we're the largest beneficiary of that."
