MGM Deal Could Help iGambling Legalization

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Wednesday, June 22nd, 2016 | Written by Shane Larson

At the end of May, MGM Resorts made a major announcement, the ramifications of which could have a major impact on both the USA’s internet gambling, as well as its brick and mortar casino industry. On that date, MGM Resorts announced that it had bought out its partner Boyd Gaming to become the sole owner of the Borgata Hotel & Casino, with MGM Resorts International (MGM) CEO Jim Murren stating at the time:

“Our decade-long partnership with Boyd Gaming has been a great one, and Borgata’s talented employee base will complement and strengthen our more than 60,000-member worldwide MGM Resorts team. We are excited about the opportunity to bring our market-leading loyalty program, M life Rewards, to the resort and integrate our operations, to position Borgata for further growth.”

MGM Resorts Financial

Following announcement of the deal, shares of MGM shares hit a 52-week high of $25.06 on Jun 8th, and have since held strong with stock prices currently trading at $24.47 on July 22nd, giving the company a market evaluation of $13.97 billion. Overall, MGM shares are up by 9% since the company first announced its intention to purchase the Borgata Hotel Casino & Spa on May 31st, with the deal expected to be finalized in Q3 of 2016, subject to all necessary regulatory approvals being met.

A Smart Move for MGM Resorts

As the premier casino in Atlantic City, the Borgata is sure to be a wise investment for MGM Resorts and well worth the $900 million price tag that the company paid to buy out their partner. MGM Resorts will add the property to their portfolio of casinos located across the United States and worldwide, and as CEO Jim Murren commented after the deal was finalized:

“Borgata is the premier resort in Atlantic City and a great addition to our growing presence in the Northeast. While the market continues to experience challenges, Borgata has outperformed and differentiated itself as the undisputed leader in the city.”

The Impact on Online Gaming

While it’s easy to see how MGM Resorts’ full ownership of the Borgata will affect the brick and mortar gaming industry, analysts are also predicting that the move could mean big things for online gaming, too. Some are speculating that part of what drove MGM Resorts to seal the deal was a belief that states like Pennsylvania, Michigan and Connecticut may soon legalize online gaming. If this were to occur, MGM Resorts could be in the position to benefit from interstate compacts and build large online gaming networks with players located in New Jersey and in other states where they have a brick-and-mortar casino presence. As poker news analyst Steve Ruddock wrote recently:

“If expansion occurs, multiple online gambling stakeholders will have national interests and realize a potential windfall from interstate agreements. This should make the barriers for interstate and even international agreements less daunting.”

MGM Resorts Is Not Alone

MGM Resorts isn’t the only casino and online gaming site operator that is well placed to benefit from the legalization of iGaming in other states, and the possible interstate gaming compacts that may follow. A number of other big names in the industry are also likely to be considering such moves, including:

– Caesars. Caesars and their iGaming operator 888 are already operating sites in Nevada and New Jersey, and 888 also has a presence in Delaware. Caesars has casinos located in Pennsylvania and California, two states where experts predict iGaming is likely to be legalized first.

– Mohegan Tribe. The Mohegan tribe currently operates Resorts Casino in Atlantic City and has their own iGaming site called MoheganSun.com. The tribe also operates the Mohegan Sun at Pocono Downs in Pennsylvania and the Mohegan Sun Casino in Connecticut, putting them in a position to launch their own network in the future.

A Potential Push for Lawmakers

With major companies like Caesars and MGM Resorts seeming eager to profit from possible online gaming networks, it’s likely that representatives of the casinos will be actively lobbying state lawmakers in states where the companies currently operate brick and mortar casinos. As a result, advocates for online gaming are celebrating MGM Resorts’ move to become the sole owner of the Borgata, hoping that with more skin in the game the company will use their influence to encourage lawmakers to move ahead with legislation that would legalize and regulate online poker and casino gaming.