The sale of the old gaming halls paves the way for MGM Resorts, the operator of facilities such as Mandalay Bay and Bellagio, to create one of the largest online gaming platforms in the United States.
On Wednesday, company executives said their online gaming platform BetMGM is the second largest sports betting and digital gaming platform in the United States. FanDuel ranks first in the rankings, an MGM spokesman later explained to Skift.
This fast-growing platform, which is expected to reach $ 1 billion in net revenue next year, gives MGM Resorts the opportunity to reach customers outside of traditional casino resorts. But sale of this property helps pay for the infrastructure needed to leverage BetMGM.
“The idea of omnichannel can and will work and will not be cannibalism is something that I am very excited about moving forward,” said MGM Resorts CEO William Hornbuckle during a phone call with investors on Wednesday.
Hornbuckle tried to play down any fears that the rise in sports betting and online gaming will come at the expense of conventional casinos. He pointed to company data showing that Detroit’s MGM casino increased its market share in Michigan over the summer, while BetMGM maintained its leading position in online gaming in the state.
The P&L report came on Wednesday hours after MGM Resorts announced plans sell most of your stake in a residential real estate trust, MGM Growth Properties, at Vici Properties for $ 4.4 billion. Under the deal, MGM Growth is valued at $ 17.2 billion and includes 15 resorts in Las Vegas and other parts of the United States.
MGM Resorts will retain approximately 1% of the housing stock in anticipation of the expected closing of the deal sometime in the first half of next year.
The sale is the latest in an ongoing push for the asset lighting model at MGM Resorts, which has ditched properties such as Bellagio and Circus Circus in recent years. The Bellagio deal was a sale and leaseback in which MGM Resorts continues to operate the resort on behalf of the current owner of Blackstone.
The casino operator announced a similar deal with Blackstone last month. for your CityCenter complex, which includes the resorts of Aria and Vdara.
The overall strategy allows MGM Resorts to devote more resources to other growing divisions such as BetMGM as well as new markets such as Japan.
“We’ve discussed our goals for a long time to simplify our corporate structure and monetize our premium-valued properties to turn them into light assets,” Hornbuckle said, before celebrating a recent spate of deals over the past three months, including the sale of his property for 400 million dollars. MGM Springfield in western Massachusetts in May: “We’ve been busy on this front and we’ve made significant headway in the past 90 days.”
All eyes on iGaming
The omnichannel Hornbuckle described for the casino resort business means being able to meet customers in a variety of ways, from the vast plazas of a Las Vegas resort to their iPhone screens as they sit in their living room.
Online gaming, or iGaming, is becoming an increasingly important part of MGM Resorts’ revenue stream. Thirty-one percent of new players to MGM life Rewards in the second quarter came from the BetMGM platform.
According to MGM forecasts, revenue from the online gaming platform next year will exceed $ 1 billion – a rapid increase from $ 178 million last year.
Online gaming has been the focus of MGM’s focus in recent years, but hasn’t always benefited the company. Entain turned down MGM’s $ 11 billion offer Earlier this year. But Barry Diller’s IAC / InterActive $ 1 billion, or 12 percent, of the company’s stock last year. with the intention of expanding their presence in online gaming.
With billions of dollars in real estate capital to return to the company, MGM Resorts, considering another merger or acquisition, would seem natural. But Hornbuckle is not yet attached to this idea.
“Our strategy does not depend on just one other company,” he said of a potential reallocation of capital following the close of real estate transactions. “We will continue to search. The good news is that we have six to nine months until these transactions close, and time is our friend. We will be disciplined in our approach. “
MGM Resorts posted a profit of $ 105 million for the second quarter, a significant rebound from the $ 857 million recorded in the second quarter of last year. Loss of $ 332 million in the first three months of this year…
Traveling to Las Vegas had a lot to do with the recovery, with average occupancy rates for the quarter at 77 percent – up from 43 percent at the same time last year. The company’s Las Vegas resorts averaged 86 percent occupancy in July.
“In the last few quarters, a lot has been asked about when will we get to 90 percent. [of pre-pandemic levels]and I think we are there, ”said Corey Sanders, chief operating officer of MGM Resorts. “When we get back to the 2019 level, we’ll get back to the conference business.”
While company executives were optimistic about group bookings for the remainder of this year, and especially next year and beyond, they were less chatty about what the growing number of Delta Option cases could do to the company’s recovery path.
“It is too early to talk about any significant impact on our business at this time,” Hornbuckle said. “We are closely monitoring the situation.”