MGM Resorts International announced a pair of partnership agreements Monday that could significantly expand the newly-created U.S. sports betting landscape.
The Las Vegas-based casino giant entered into a 50-50 joint venture partnership with UK-based GVC Holdings to create a U.S.-based sports wagering and online gambling platform.
GVC owns several European sports betting brands, such as BWIN, Coral, Crystalbet, Eurobet, Ladbrokes and Sportingbet. GVC also owns PartyCasino and PartyPoker among its European-based online gambling brands. GVC has more than 20 online licenses globally.
MGM and GVC will initially invest $100 million into the business, which will set up an online betting platform ahead of the upcoming National Football League season.
In a separate announcement, MGM Resorts said it signed a partnership agreement with regional casino operator Boyd Gaming Corp. The two casino companies will offer sports wagering and legal online wagering across 15 states where they have casino resorts. MGM will provide Boyd with market access to five sates – Maryland, Massachusetts, Michigan, New Jersey and eventually New York.
“Our industry is evolving, providing opportunities for growth through new forms of gaming like online and mobile gaming,” said Boyd Gaming CEO Keith Smith. He added the agreement positions Boyd “for significant future growth as our respective companies take a leadership role in our industry’s evolution.”
According to a statement, the MGM-GVC joint venture will establish a separate headquarters in a “major U.S. technology hub,” create a leadership team, and form a four-person board with two representatives from each company. GVC will provide the technology while MGM and Boyd provide 15 state gaming licenses and access to MGM’s M Life customer rewards database, which has more than 30 million users.
MGM Chairman Jim Murren added that the company is acquiring the Empire City Casino and Yonkers Raceway near New York City, which will provide the joint venture “access to the densely populated, sports-heavy New York market.”
Murren said the partnership with GVC positions the joint venture, “to become the instant leader in technology, market access, sports relationships and brands.” The casino company also plans to, “leverage its substantial sports, entertainment, and professional league relationships.” MGM owns the Las Vegas Aces franchise in the WNBA and the NHL’s Vegas Golden Knights play at the MGM-owned T-Mobile Arena on the Las Vegas Strip.
Wall Street analysts immediately gave the two joint ventures high marks.
“We believe the joint venture deal is a net positive for both GVC and MGM as MGM gains the invaluable, and difficult to recreate technology platform and online expertise that GVC possesses in a cost-efficient manner,” Deutsche Bank gaming analyst Carlo Santarelli said in research note. “We also believe the deal helps both companies in their speed to market, an important element, in our view, of U.S. sports betting as we expect market shares on a state by state basis to be largely concentrated over time.”
Jefferies gaming analyst David Katz said the deal combines the online and bookmaking capabilities of GVC’s brands with MGM’s brand, footprint and U.S. customer database.
“The deal would be consistent with other partnerships that have occurred – and which we expect to occur in the future – to capitalize on sports betting,” Katz said a research note Sunday night when the deal was being speculated by British media. “This deal would create a global scale in online and land-based wagering.”
Eilers & Krekcik gaming analyst Chris Grove said the agreement between MGM and GVC, “broadly makes sense” for both companies.
“MGM locks up a dedicated partner to handle markets that are largely outside of its core competency with an option to buy once the market has evolved into something closer to nationwide,” Grove said in a note to investors. “GVC ensures itself access to a number of major first wave markets and will benefit in myriad ways from such a deep tie-up with one of the world’s marquee gambling brands.”
Grove said the MGM-Boyd deal “makes sense on face, although there are significant questions regarding how it will work in practice.”
Macquarie Securities gaming analyst Chad Beynon said MGM Resorts has the largest sportsbook operation in Las Vegas with a 35 percent market share.
“We believe this is another positive announcement for MGM,” Beynon said. The casino operator plans to announce second quarter earnings on Thursday.
Boyd will eventually bring to the table eight states where MGM does not operate – Illinois, Indiana, Iowa, Kansas, Louisiana, Pennsylvania, Ohio, and Missouri.
This is the second partnership between MGM and Boyd. The companies were 50-50 partners in Atlantic City’s Borgata resort, but MGM bought out Boyd’s stake two years ago.
“We are excited to team yet again with Boyd Gaming on this unprecedented partnership,” Murren said. “We look forward to expanding our entertainment options for guests beyond their visits to our land-based resorts.”
The companies said the joint venture will allow the opportunity to mobile and online sports betting, real money casino gaming and poker products when they become legal in various states.
The joint ventures were announced before the stock markets opened Monday. Shares of MGM Resorts closed at $30.77 on the New York Stock Exchange, up 5 cents or 0.16 percent. Shares of Boyd, also traded on the New York Stock Exchange, were up 52 cents, or 1.47 percent, to close at $35.10.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
