Although MGM Resorts International had a stellar first quarter in 2023, CEO Bill Hornbuckle started Monday’s earnings call with news about the operator’s Japanese interests. Recently, government officials in Osaka certified the gaming operator’s area development plan and Hornbuckle is confident that construction on “what will likely be the first integrated resort in Japan” will begin later this year.
“We look forward to getting started on some major development to increase our global reach and fulfill our strategy to increase our geographic diversification,” Hornbuckle said during the call.
MGM reported net revenue of $3.9 billion for the quarter, a year-over-year increase of 36%. Operating income was $731 million compared to $106 million during the first quarter of 2022.
On April 14, MGM reported Japan’s Ministry of Land, Infrastructure, Transport and Tourism had certified an area development plan submitted in 2022 by Osaka Prefecture/City and by Osaka IR KK, a joint venture between MGM Resorts Japan and the Orix Corporation, an essential step for construction of the approximately $10 billion project.
“We’re fairly committed (to the project),” Hornbuckle said. “The idea of going in reverse would be hard to contemplate. And given the nature of that lease and the other documents we’ve signed with the government of Osaka, they’re definitive in nature and therefore we’re paying out cash. So we’re going forward with some excitement.”
Hornbuckle also was bullish on prospects for MGM’s Chinese interests in Macau and Cotai. He noted that in this past first quarter, MGM China properties generated adjusted property EBITDAR of $169 million, 88% of 2019’s first-quarter total.
Hornbuckle credited the lifting of public-health restrictions in China, along with “a well-executed plan put together by our team at MGM China” that ensured the operator was ready to capture market share and drive results.
“We think that the market will continue to recover as more and more gaming customers and leisure travelers make their first post-pandemic trip to Macau,” said MGM China President and Chief Operating Officer Hubert Wang. “Another source of recovery is the concerted efforts by concessionaires to attract overseas players. I think that MGM has led the market in our recovery pace.”
Hornbuckle was also optimistic about BetMGM’s prospects, which he said is “showing all signs of profitability.” He added that “tens of thousands of customers” on an omnichannel basis are driving over $100 million yearly “back and forth.”
“That part of the business is starting to kick in and work,” Horbuckle said. “We have work to do on product. We need single-wallet single-account to be really effective in places like Maryland, New Jersey, Pennsylvania, and New York. We’re market leading in gaming at 28% share; nobody even comes close to that. But we’re mindful that people are trying, so we’re very focused on it.”
MGM’s optimism about its Las Vegas Strip properties is partially linked to the increase in professional sports in the area. Citing the NFL’s Las Vegas Raiders and November’s Formula 1 race – Hornbuckle mentioned that he’s seen estimates that the race will pump $1 billion into the Las Vegas economy – there’s also guarded confidence that the proposed move of the Oakland Athletics to the area will be beneficial.
“We think it could bring about 400,000 tourists a year to the Valley,” Hornbuckle said. “That’s a reasonable number created by a bunch of folks looking at it. We think that part’s accretive.
“But we’re not a fan of having any more tax dollars put into this. We yield to the governor’s position (Nevada Gov. Joe Lombardo has stated in various forums that there will be no state money for a stadium) and assume that this will be done responsibly for the state and for Clark County. I believe that it will be accretive to the overall visitation.”
