MGM Looking To Sell Mirage, Not Buy Out BetMGM Venture

November 4, 2021
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MGM Resorts International on Wednesday announced that it plans to sell one of its iconic Las Vegas Strip properties, but also indicated that buying out the other half of its BetMGM joint venture is not on the company’s immediate list of priorities.

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MGM Resorts International on Wednesday announced that it plans to sell one of its iconic Las Vegas Strip properties, but also indicated that buying out the other half of its BetMGM joint venture is not on the company’s immediate list of priorities.

Speaking to analysts on a quarterly earnings call, MGM CEO Bill Hornbuckle did not seem desperate to either make another bid to acquire BetMGM partner Entain or to buy the other half of the joint venture, following DraftKings’ aborted efforts to acquire the London-listed online gambling giant.

“Given the environment that was being described, there was basically an opportunity to walk away with technology, that would have been interesting,” Hornbuckle said of the discussions between the three companies.

“We were prepared to do it if the other party could get to the finish line or decide to get to the finish line. For now though, we’re content and happy with our business and how it’s progressing,” he added.

“We wouldn’t do it without a technology platform to be sure, and right now I’m not anxious to do it.

“I like where we are, it’s a developing business, I like that Entain shares in half its [BetMGM’s] development costs. It’s a progressive and aggressive environment, and I still like where we are.”

Ongoing speculation over MGM’s interest comes as the company is due to receive more than $4bn through the sale of its stake in real-estate trust MGM Growth Properties and as MGM expects to close next year on its $1.6bn purchase of the operations of The Cosmopolitan of Las Vegas.

On Wednesday, the company announced it is in “the early stages of a process” to sell the operations of The Mirage.

“Doing so will allow us to maintain our existing Las Vegas exposure while focusing on the complementary and diverse nature of our offerings in our hometown,” Hornbuckle said.

“We have enough of Las Vegas, and we look at the marketplace, obviously we’re buying and selling at the same time, so we understand the marketplace,” Hornbuckle said.

“We think there is an opportune time and this may be it to sell an asset in Las Vegas and it became for us, the obvious one. As we think about our portfolio, we think about things going forward in capital allocation.

“It just fell pretty far down on the spectrum of how much capital we’d allocate to it at any given period in time in the near future, so we made the strategic decision to sell it,” he added.

In the third quarter, MGM reported a 140 percent increase in total revenue of $2.7bn, led by the strong recovery of Las Vegas and other U.S. casino markets.

BetMGM third-quarter revenues were $227m, although MGM’s share of operating losses incurred by the venture amid aggressive marketing investments was $49m.

During the analyst call, Hornbuckle also addressed media reports that BetMGM’s joint bid with DraftKings, FanDuel and Bally’s is set to be among two winning consortia selected by the New York State Gaming Commission to offer mobile sports betting in the state.

The New York Post reported that a joint bid led by Kambi and including Caesars, PointsBet, Rush Street Interactive, WynnBET and Genting’s Resorts World will also be selected.

Last month, the commission granted license applicants the opportunity to match an unidentified bidder’s proposal to pay a tax rate in excess of 60 percent if the New York market is limited to four or five operators, but 50 or 51 percent if nine to 12 operators are selected.

“I can assure you we weren’t the 62 percent crowd,” Hornbuckle said of the high bid that was submitted.

“It’s probably going to end up at 50 [percent tax rate], time will tell. But I think that’s what we’re all contemplating; it’ll be nine or ten operators, give or take.”

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