Instead of building another brick-and-mortar casino on the south side of Vegas, MGM should invest more heavily in the online and mobile gaming spheres.
MGM Resorts is gravitating more and more towards the south side of the Las Vegas Strip and could be considering the construction of yet another mega-resort. But while MGM may think that another casino is a good idea, some industry analysts are questioning the wisdom of this move.
Downsizing on Vegas’ North Side
For more than ten years, MGM Resorts has been on a quiet mission to sell out its properties on the north side of the Las Vegas strip. At the start of the recession years in 2008, MGM sold its Treasure Island property.
Eleven years later, it was paid $825 million for its Circus resort.
The last standing MGM beacon on the north side of the Strip is The Mirage. While it was clear that MGM was hoping to learn more strongly to the south side, it came as a surprise recently when the group announced that it was selling The Mirage to Hard Rock International.
The Sale of The Mirage to Hard Rock
It was reported that Hard Rock International is paying $1.1 billion in cash to MGM Resorts for The Mirage, its last property on the north side of the Strip.
When the Mirage was built in the very heart of the Strip, it was the largest hotel of its kind in the world at the time and set the bar for luxury, dining, and casino opportunities in the global industry.
But with the sale of the property to Hard Rock International, the iconic 77-acre resort will be rebranded as Hard Rock Las Vegas and get a complete makeover – including a massive guitar-shaped structure on the building.
“We are honored to welcome The Mirage’s 3,500 team members to the Hard Rock family,” said Jim Allen, chairman of Hard Rock in a statement last week. “When complete, Hard Rock Las Vegas will be a fully integrated resort welcoming meetings, groups, tourists, and casino guests from around the world to its nearly 80-acre center-Strip location.”
Is a New South Side Casino on the Cards?
MGM Resorts now owns almost all the land on the south side of the Strip, from the Bellagio to Mandalay Bay, as well as the MGM Grand massive complex just across the street.
This wasn’t always the case, because, until recently, MGM had competitors located between some of its south-side properties.
But this year, MGM solved that issue by acquiring the competition to control the south side almost in its entirety. MGM announced in September that it was paying the Blackstone Group $1.6 billion to acquire the operational rights to the Cosmopolitan. The only property it doesn’t operate is The Tropicana.
Recently, the chief financial officer of MGM, Jonathan Halkyard said at a conference that the group, theoretically, could build a new casino on the seven acres on the land facing its Excalibur property. This casino would have around the same footprint as the Cosmopolitan and could include a 3,000-room tower.
Halkyard pointed out that there are no concrete plans to build a new casino, but it is nonetheless an option for the group.
Is a New Casino in Vegas a Good Idea?
But industry analysts don’t believe that MGM should invest its money and other resources on building yet another brick-and-mortar casino, especially in the new pandemic reality.
Their main argument is this: Why not focus online and spend the billions establishing the brand across the length and breadth of the country. Many of their competitors are making moves as evident by the number of casinos already listed at NoDepositKings, a US online casino guide.
MGM Resorts already has a thriving online betting business in the form of BetMGM, which is slowly but surely gaining market share in the US’s fast-growing online gambling market.
By investing more in BetMGM, the group could corner an entirely new segment of customers and drive them to its existing properties in Las Vegas.
MGM’s rewards program, MLife Rewards is now in partnership with BetMGM. This means that online gamers can earn benefits at brick-and-mortar properties when they play.
Analysts agree that it makes perfect sense for MGM to tie its mass of south-end Las Vegas properties with an online gambling platform as this could result in key long-term growth for the group.
MGM is in a Good Financial Space
Despite the pandemic, MGM Resorts is performing reasonably well under the circumstances. According to the group’s latest quarterly earning numbers, it has recovered most of what it lost last year.
With that in mind, it makes perfect sense for MGM to use its good financial position to invest in the future of US online gaming, which is undoubtedly taking place in the online and mobile spheres.
