MGM sports betting highlights from Q2 earnings report

Will MGM’s Early Moves Lead To Dominance In US Sports Betting?

MGM sports betting

Sports betting was a prominent topic during Thursday’s Q2 earnings report from MGM Resorts International.

During a call with investors, CEO Jim Murren provided context around one of the busier weeks in company history. His comments and a recent string of new partnerships reveal a serious desire to capture the US sports betting market.

MGM highlights for Q2

In terms of sheer volume, the second quarter was a notable quarter of news for MGM:

Any of those would have represented a quarter’s worth of news for most operators, but MGM rattled off the whole list. The first four items all happened this week.

That said, MGM is actually working to become more “asset-light” in the coming years. It wants to offload four pieces of real estate, including three on the Las Vegas Strip:

  • Bellagio
  • Circus Circus
  • MGM Grand
  • MGM Springfield

The company uses the subsidiary MGM Growth Properties to manage its real-estate transactions. The pending transfer of Mandarin Oriental should close during Q3 this year.

MGM Springfield is scheduled to open on August 28 along the southern border of Massachusetts.

MGM ‘busy on sports’

“As many likely know,” Murren said, “we’ve been recently back from New York, where we’ve been busy on sports.”

That’s a bit of an understatement. The chief executive signed off on three huge sports betting alliances this week.

MGM slide

First, MGM is now paired up with GVC, one of the largest gambling companies in the world. Here’s Murren on the joint venture:

We knew we needed to have the best technology — proprietary, scalable. We knew we needed to have an outstanding in-game betting experience which does not exist here in the United States but, of course, it does throughout the world. And we needed to have a partner that could help us build this business with a speed to market.

MGM sports betting also needs to broaden its footprint to reach more customers at the regional level. To that end, a deal with another casino company made sense:

We also know that we need to be in every market in which a consumer can gamble on sports in the United States, and so we turned to our friends and partners at Boyd Gaming. This provides our platform the opportunity to go into every state that MGM and Boyd operates in.

That’s a total of 15 states across their combined portfolios. Murren sees “an opportunity to dominate” the sprouting industry outside of Nevada. “We have the brands, we have the people, we have the markets,” he said.

Things seem to be going well in MGM’s existing sports betting operations. According to the presentation, the company was responsible for 35 percent ($114 million) of the total win for sportsbooks on the Strip last year.

In New Jersey, legal sports betting at Borgata has already grown to represent 20 percent of the group’s volume. Murren confirmed that MGM will launch mobile NJ sports betting within “days, if not hours.”

He also expects to see new sports betting legislation in New York and Massachusetts in 2019. MGM will own property in both of those states by the end of this year.

MGM on NBA partnership

For our purposes, the NBA deal is the key piece of MGM news this quarter. The two big brands formed the first commercial deal between a sportsbook and a US sports league.

MGM is now an official partner of the NBA, an new and exclusive title. Cross-promotion includes permission to use the NBA logo and exposure for its own logo across the league’s digital platforms. The cautious nature of the agreement is reflected in its terms, which are rumored to be a modest $25 million over three years.

The partnership also gives MGM access to the NBA’s data stream for the purposes of settling wagers. Murren believes this data will allow the company to deploy the best in-game platform for betting on basketball:

We also knew that data is everything, and integrity and trust in the data is tantamount to success, which is why we’re particularly proud of the unique partnership we just forged with the NBA, where we are now the data receiver and the official gaming sponsor of the NBA and the WNBA.

While official status with the NBA is exclusive, the data partnership is not. The league intends to pursue similar deals with other operators. For now, however, MGM is the only one authorized to use official league data.

Q2 financials

Here are a few vital numbers from the Q2 report:

  • Consolidated net revenue of $2.9 billion, up 8 percent year-over-year
  • Net income of $124 million, down 59 percent YOY
  • Buy-back of $595 million in shares from stockholders

Factors hindering the comparative numbers include the ongoing Park MGM rebranding (formerly Monte Carlo), a sparse schedule of tourism events in Las Vegas, and recent changes to accounting standards.

Murren highlighted as much while framing MGM’s performance in its home market:

Our Las Vegas Strip resorts benefited in the prior year third quarter from a stronger citywide convention base, two major boxing events and a higher than normal table games hold. The difficult comparison in citywide convention attendees has resulted in a more negative than anticipated hotel mix shift, creating short-term competitive rate pressure in the current year third quarter. In addition, the transition of Park MGM continues to create short-term headwinds but is on track to complete its transformation by the end of this year.

MGM’s forecast also includes some growth abroad, stemming from the new MGM Cotai in Macau and the pursuit of an emerging market in Japan.

Thursday’s press release contains the complete financial report.

Eric Ramsey
- Eric is a reporter and writer covering regulated US gambling, sports betting, and DFS. He comes from a poker background, formerly on staff at PokerNews and the World Poker Tour.