US – MGM boss slams DoJ Wire Act opinion as ‘perplexing,’ ‘unenforceable’ and ‘poorly written’By Phil - 14 February 2019
MGM Resorts International Chairman and CEO Jim Murren slammed the US Department of Justice’s revised opinion on the Federal Wire Act as ‘perplexing,’ ‘unenforceable’ and ‘poorly written’ during the operator’s fourth quarter earnings conference call.
Mr. Murren said: “It is an understatement to say this latest missive from the DOJ is perplexing. It’s just, we think, an absurdly poorly written and unenforceable opinion, and I don’t think anyone in the industry, the gaming industry, the sports betting industry, feels any differently. If reads as words, it would mean that Powerball, as it exists in 44 states in the US, isn’t legal anymore.”
In an overview of how he thought MGM was performing in the new sports betting markets, he explained that as expected the rollout state-by-state had been ‘frustratingly slow, tortured, unclear and not transparent.’
“Some states we believe have done it well, some states have done it very poorly,” he explained. “And there is a mix everywhere in between, with several major market states exploring that right now. Our sports betting app is doing well. 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.
Mr. Murren was full of praise for MGM’s rival operators. “There are some really smart companies in this space competing against us. They too have made progress. The Caesar’s transaction with Turner 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 as a good opportunity. But I think I’d have to say, 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 not only in the interactive space, but around sports.”
Adding some colour to what is referred to as simply the Big Game, he explained: “We had a good Super Bowl at MGM Resorts. We could have made more money with different outcomes, but I guess it shows the power of having a lot of liquidity and a lot of handle on the game and we did better this year than we did last year on the game itself, in terms of profitability on the game. The challenge for us this year, and for everybody else is, the Super Bowl and Chinese New Year are almost right on top of each other, as opposed to last year, where they were almost two weeks apart. So we had challenges around high-end room product. We had challenges around activity and then exacerbating that in the case of Chinese New Year, is a fact that some folks just didn’t feel like coming to the United States, because of any number of reasons, but it was a good Super Bowl.”
Mr Murren was speaking as MGM released its fourth quarter results where consolidated net revenues increased 18 per cent compared to the prior year quarter to $3.1bn. Net revenunes on the Strip increased six per cent to $1.4bn compared to the prior year quarter. Net revenues increased 18 per cent in MGM’s domestic/regional markets to $782m including contributions from the opening of MGM Springfield on August 24, 2018 of $78m. MGM China saw net revenues increase by 33 per cent to $687m including contributions from the opening of MGM Cotai of $287m.
Mr Murren added: “We had a strong finish to the year, driving growth across all Las Vegas segments in the fourth quarter. Our fourth quarter consolidated net revenues grew by 18 per cent and our consolidated Adjusted EBITDA by 21 per cent, before certain one-time benefits. Our Las Vegas Strip Resorts achieved the best fourth quarter Adjusted Property EBITDA since 2007. We also continued to gain share within our regional markets and realised record fourth quarter revenues and Adjusted Property EBITDA performance at MGM Grand Detroit, MGM National Harbor, Beau Rivage, and Gold Strike Tunica. Additionally, we closed out the year with the official openings of Park MGM and NoMad Las Vegas, both of which have received overwhelmingly positive responses.
“Looking ahead, we remain highly focused on our strategic priorities, including maximizing the performance of our premier properties, driving consolidated free cash flow growth and successfully executing MGM 2020 – our recently announced plan dedicated to improving efficiencies, reducing costs, and investing in key technologies to position the Company for further profitability. Through MGM 2020, we are reinvesting in our business and we expect to begin to see the financial benefits in the back half of 2019,” Mr. Murren continued. “We also remain committed to targeted growth opportunities such as sports betting and the pursuit of an Integrated Resort in Japan. Importantly, we will continue to prudently allocate capital, with a focus of returning excess cash to shareholders.”