MGM Cashes In Real Estate Chips; Gaming Enjoys A Hot Spring
From MGM selling the land the company’s casinos sit on to a boom in gambling among Las Vegas locals and around the country, it’s a hot summer in the gaming industry.
The biggest players on the Strip used to be MGM Resorts International and Caesars Entertainment. Now, the big kahuna is VICI Properties.
The real estate investment trust just spent $17.2 billion to acquire ownership of MGM’s properties, which had been held by a separate trust spun off years ago by the casino giant.
“The simplest answer is that they basically are the landlords, they buy the land, and the buildings of all these different industries,” longtime gaming reporter Howard Stutz told State of Nevada.
He said the deal frees up cash for MGM, which will continue to operate the properties under long-term leases.
“That money they can use to reinvest into their properties and push into the online gaming and mobile sports betting that they've been doing around the country,” Stutz said.
VICI stuck similar deals with Caesars and Las Vegas Sands over some of their properties On the Strip, the trust will control more than 660 acres covering a dozen properties that include nearly 40,000 hotel rooms and 6 million square feet of convention and meeting space.
In other industry news, the American Gaming Association reported that the industry had its best second quarter in history, taking in $13.6 billion, and could be on track to its best year ever.
“People were getting out,” Stutz told State of Nevada. “March was the first time to really get away in a lot of places.”
One caveat: the optimist trade group report was prepared before the rise of the COVID-19 delta variant, which has added fuel to the pandemic.
Stutz said that while drive-in markets performed well during the pandemic, Las Vegas still suffers because of reduced international and convention business, with Nevada showing only a small revenue boost.
Locals casinos have performed well, and Stutz credits their amenities such as restaurants that helped lure people back when pandemic restrictions eased.
“I think that's really what it boils down to — people wanting to get out.”
Howard Stutz, gaming reporter, Nevada Independent