Major Casino Operator Redirects Resources to Grow Online Business
Among fears that the ongoing massive wave of casino resort developments along the East Coast has reached the ceiling of what a finite pool of gamblers can generate as revenues and that an upcoming recession is going to hit the gambling industry hard, MGM Resorts International is redirecting resources to grow its online casino presence.
The casino and hospitality giant is even selling off casino real estate on the Las Vegas Strip and using the proceeds to fund the expansion of its BetMGM online platform. Nevertheless, the company continues to operate the sold assets under its own branding through management and leasing contracts.
At the same time, the expansion of online gambling has granted people the opportunity to watch the wheel spin on a live-dealer online roulette game from the comfort of their own living room without the need to drive or fly to a brick-and-mortar casino.
In the light of all this and given that travel has not yet been fully restored after the pandemic, one would think the surge to open new multi-billion casino megaresorts is over.
Investments in Land-Based Casinos are Not on Hold
Yet, MGM has joined a race with other major competitors such as Wynn Resorts and Las Vegas Sands for one of the three permits to establish a full-scale casino in the New York City area where the expected license will cost at least half a billion dollars, exceeding “the highest (licensing fee) of the industry by five times,” as per the words of MGM Resorts CEO and President William Hornbuckle.
If MGM gets one of the licenses, the company will invest billions in their Empire City “racino”, currently a horse racing track that additionally features electronic lottery games.
“We had hoped to invest up to a couple of billion (dollars) in the first round to put us into the table games business, to expand some of the amenities and put in a much-needed parking garage there, to put an entertainment facility there and potentially some other things,” Hornbuckle said on an investor call.
Online, Offline, or Omnichannel?
According to Hornbuckle and other top industry officials, there is no such thing as having to choose between growing the land-based casino business or the online gambling platforms, as they both can go hand in hand in an “omnichannel” marketing strategy.
“The idea omnichannel can and will work and not be cannibalizing is something I’m excited about moving forward,” MGM Resorts CEO said. He also pointed to company data revealing that MGM’s casino in Detroit expanded its market share during the summer of 2021 while the company’s internet branch BetMGM boasted a leader position in the online gambling market in Michigan.
From the point of view of state and city administrations, however, there are some substantial differences between brick-and-mortar casino projects and online gambling platforms.
“You have to understand that a traditional casino creates so many jobs where online sports betting or online gaming creates very few jobs,” explained Alan Woinski, CEO of casino consulting and publishing company Gaming USA Corporation.
“So, if you’re a state or a city that wants to get casinos, they’re not just looking for just tax dollars. They’re looking for the entire package and what it’s supposed to do for the market and for the region,” Woinsky added.
Casino Industry Reports Record High Revenues
On the national scale, the US gambling industry had its best ever year-opening quarter registering $14.31 billion in gaming revenues for the first three month of 2022. The only higher result in reporting history was for the last quarter of the previous year marking revenues of $14.35 billion.
Wynn Resorts’ $2.6 billion casino resort north of downtown Boston – the Encore Boston Harbor, recorded its highest gross gaming revenue ever in March this year amounting to $65 million. The June result fell down to a bit more than $60 million, but that is still much better than the months after the resort’s opening in 2019 which rarely passed the $50 million threshold.
The casino industry in Maryland, including the MGM National Harbor outside Washington, D.C., and Live! Casino Maryland in Baltimore, has its best year in history in 2021.
The stock prices of major operators, however, do not reflect these positive trends, as in the end of July MGM Resorts International stock was down 28 percent compared to its price one year ago. Wynn Resorts stock was down by the same percentage, while Caesars Entertainment had plunged with more than 50 percent.
“According to Wall Street, the shoe’s about to drop, and they’re about to get killed by a recession. It never happens the way Wall Street thinks,” commented Alan Woinski. “Regional casinos do better than most expect in a recession. The number of times the industry is counted out is just ridiculous, and they always come back fine.”