Dubai World makes $5bn gamble on Las Vegas casino

The government-owned firm says it will invest in Kirk Kerkorian’s MGM Mirage, the world’s second-largest casino company, helping it to branch into hotels and condominiums.

Dubai World, the government owned-investment company, says it will invest $5 billion (€3.7 billion) in MGM Mirage, the world’s second-largest casino company.

The firm will buy a 9.5 percent stake in MGM with an option to increase that to 20 percent. It will also spend $2.7 billion on a 50 percent stake in CityCenter, a new hotel and casino complex MGM is planning for the Las Vegas strip.

MGM owns casinos in Las Vegas including the Mirage, Luxor and The Bellagio. Kirk Kerkorian, the 90-year-old businessman who owns 54 percent on the company, said in May he was looking to lessen the company’s dependence on gambling and develop more hotel, housing and entertainment, prompting a wave of investor interest.

MGM owns and operates 17 casinos in Nevada, Mississippi and Michigan and is involved in three joint ventures. It is second only to Harrah’s Entertainment, which is the biggest casino company by revenue.

In July, the chairman of Dubai World, Sultan Ahmed Bin Sulayem, said the firm’s next property investments would be in the US and Asia. The Nakheel Group, the property investment arm of Dubai World, has already announced plans to expand its scope beyond Dubai. Nakheel is reportedly working with Indian developer The DLF Group to invest $10 billion in two 20,000-acre township projects in Gurgaon and the South Maharashtra/Goa region in India.

Istithmar, Dubai World’s private equity arm, is also steadily increasing its focus on international real estate. In June, the firm acquired an 80 percent stake in a $130-million luxury hotel development planned for a prime location in the heart of downtown Bangkok.