MGM Resorts International has published financial results for the quarter and year ended December 31, 2018. Shares in the gaming company rose on the release which contained better than anticipated revenue, with consolidated net revenues ahead by 18% compared to the prior year quarter to $3.1bn. Consolidated operating income increased 50% compared to the prior year quarter to $336m.
The update also enabled Jim Murren, Chairman and CEO, to talk more expansively about a number of MGM’s interests, notably sports betting. In a follow-up Q&A session, he set out the company’s current view on sports wagering.
“We are proud of what we’ve done,” he said. “I think we’ve talked about this before, but we felt the pillars of success would be the following. We wanted to make sure that we had the right technology; in-house, scalable, evolving technology and we knew we didn’t have it and we didn’t want to buy it off the shelf and we did not want to buy a company, and that led us to the robust negotiations and the conclusion of joint venture with GVC.
“And that is working out extremely well, certainly from an MGM perspective, but I think GVC would say the same. We have a leader there. They are scaling up their operations. They are sourcing the headquarters. They are building staff. So we feel that that was the right decision, not only from a technology perspective, but to get the in-game betting analytics, which are really vital to real success. That’s one.
“Secondly, we wanted to develop an extraordinarily robust, trusted relationship with customers, which is why – before we did almost anything else – we started reaching out to a targeted number of the leagues. Those league partnerships which we’ve announced have resulted in manifest opportunities for us. The NBA, as an example, because of that partnership, you are going to see a far more exciting, longer lived summer league activity out here this year.
“The MLB partnership, in addition to working with MLB and their advanced analytics, through their dotcom channels, has also resulted in some exciting Japan opportunities for us, as MGM is hosting a number of the roadshow events that MLB is doing in Japan, leading up to some games that teams like the A’s and the Mariners are playing against themselves and against Japanese teams. The NHL, with their puck and play, and of course with our proud ownership of – at least as a town of the Golden Knights, has led to other relationships outside of that.
“So these league relationships at the bigger league level, and even at a micro level, with the Alliance of American Football, which just launched last weekend has resulted in interesting technology play, which is how we view that involvement with AAF. That’s working out I think extremely well, but early days.”
Murren added, however, that the roll-out of sports betting state-by-state is as expected frustratingly “…slow, tortured, unclear and not transparent”. He said: “Some states we believe have done it well, some states have done it very poorly. And there is a mix everywhere in between, and there are several major market states that are exploring that right now.
“Our sports books, young as they are, and in some cases only temporary, as in the case of Mississippi are at/or above what we thought they would do. So I think I would call this very competitive. Some really smart companies in this space competing against us. They too have made progress. The Caesars transaction with Turner, I think is a clever and smart one. I think you will find our company going down other paths or may be similar paths, but everyone has a view this is a good opportunity.”
Murren concluded: “From our perspective at MGM, we view sports betting as a larger opportunity than simply betting on sports. We look at it as a total interactive experience, which is why you will see us talking more about social games, digital ventures, and a big part of bringing in an outside consultant that we talked about in our digital strategies around 2020, that second phase that we’ve talked about is going to be in not only the interactive space, but around sports.”