Strong Strip, regional results propelled MGM Resorts’ Q4

MGM Resorts International CEO Jim Murren on Wednesday criticized the Justice Department’s “perplexing” Wire Act reinterpretation and made a case for his company landing a gaming concession in Osaka, Japan.

Murren made his remarks in a wide-ranging conference call following an earnings report in which MGM beat analysts’ expectations with strong Strip and regional results for the fourth quarter.

Some of Murren’s most pointed remarks during the conference call with investors involved the January reinterpretation of the Wire Act and how it could affect the nation’s growing sports wagering business.

“This latest missive from the (Department of Justice) is perplexing, (and that’s) an understatement,” Murren said. “If it’s read as words, it would mean that Powerball as it exists in 44 states in the United States isn’t legal anymore. We think it’s an absurdly poorly written and unenforceable opinion and I don’t think anyone in the industry, the gaming industry or the sports-betting industry feels any differently.”

In 2011, the Justice Department interpreted the law to ban sports betting, but enabled interstate poker play and lottery sales. The new interpretation bans all forms of interstate betting, including sports wagering, and also includes other gambling-related interstate communications.

The reinterpretation could ban interstate poker games currently allowed by Nevada, New Jersey and Delaware as well as affect multistate lottery ticket sales.

Japan

Murren also told analysts that the company is in a good position to win a gaming concession in Japan and that it would focus on developing a resort in Osaka.

“We’ve had a lot of progress in Japan. We’ve been there longer than anyone else,” Murren said. “We have a large team there, in both Tokyo and Osaka. We’ve just recently opened an office in Osaka. We’ve committed now to the mayor and the governor of Osaka that MGM has adopted an Osaka-first strategy and we’re focusing our considerable resources on Osaka.”

Murren explained the process once the government announces its rules and policies, probably by summer.

“The next step for Osaka or any other jurisdiction is to go to the central government,” he said. “We know, we think, that Osaka will be one of the three concessions that will likely be granted, but we know that the central government has to select Osaka and its operator. That probably happens 12 to 18 months after Osaka itself picks its operator. Remember, Osaka’s goal is to have an (integrated resort) open by 2025. That’s when the World Expo is in Osaka.

“We have no illusions to the fact that it will not be competitive — it will be highly competitive. But I think the cards are stacked in the favor of those who are prepared, who have been working hard, who will have the best program, the best strategy, the best understanding of the country and the prefecture and I like a lot MGM’s chances.”

Murren also told analysts that a makeover of the MGM Grand’s Strip entrance mentioned in an investors’ day presentation last year isn’t imminent.

“We don’t have to do anything,” Murren said. “We can evaluate. Sometimes we evaluate for quarters and years and do nothing because the market moved away or we have different capital ideas. We’re not very close as to what we’re going to do there at this point in time.”

Murren’s remarks were made following the company’s favorable earnings report.

The company reported significant gains in revenue and cash flow from its Las Vegas properties compared with a year ago, despite lower table-game hold. The company reported a loss for the quarter that ended Dec. 31 as a result of a non-recurring, non-cash income tax expense of $92 million, 17 cents a share.

Revenue soared 17.5 percent to $3.053 for the quarter, beating the average estimate of 15 Wall Street analysts anticipating $2.98 billion. Higher revenue was attributed to exceptional results on the Strip and record performances at MGM Grand Detroit, MGM National Harbor in Maryland, and Beau Rivage and Gold Strike Tunica in Mississippi.

The company also opened new resorts on the Cotai Strip in Macau and in Springfield, Massachusetts, in the past year.

Murren said the company anticipates strong results in Las Vegas in 2019 as a result of the completion of Park MGM and the NoMad hotel there, where rooms were closed for renovation for much of 2018. He said the company has a healthy convention calendar and “Lady Gaga sells out every night” at the Park Theater at Park MGM drawing traffic to the west side of the Strip.

Murren said for years, the east side of the Strip has drawn well, but that is shifting with Park MGM and T-Mobile Arena in operation, enough so that Clark County has ordered a new pedestrian bridge, due by summer, to be built over the Strip to keep people from crossing the boulevard.

Murren noted that MGM’s robust convention calendar as well as the citywide trade-show list results in higher occupancy rates which drives the average daily room rate up.

The company is investing in its future with a cost reduction and efficiencies improvement strategy rolled out in January called MGM 2020. The plan, developed by MGM’s board, is expected to deliver $300 million in cash flow by the end of 2021.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

Business Videos
MGM's sports betting deals
MGM Resorts International signed a sports betting sponsorship agreement with the NBA in July It was the first professional sports league to have official ties with a legal sports betting house. The deal came just two months after the U.S. Supreme Court overturned a law prohibiting sports betting in most states. In October, MGM became the first gaming company to sign a sports betting partnership with the NHL. In November, MGM became the first gaming company to sign a sports betting partnership with the MLB. Financial terms of Tuesday’s deal and earlier partnerships have not been announced.
Faraday puts Las Vegas land on the market
Nearly two years after Faraday Future bailed on its North Las Vegas auto factory, the company has put its land up for sale. (Michael Quine/Las Vegas Review-Journal)
El Cortez owner Kenny Epstein on running the iconic property
Kenny Epstein, owner of the El Cortez Hotel in downtown Las Vegas, talks about Jackie Gaughan mentorship and answers rumors about bodies in the basement at the mob-era casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
LVCVA recommends construction of underground people mover
The Las Vegas Convention and Visitors Authority announced the recommendation for an underground people mover for the convention center. The system would have the potential to expand and connect Downtown and the resort corridor all the way to McCarran. (Michael Quine/ Las Vegas Review-Journal)
LVCVA/Boring Company Press Conference
The Las Vegas Convention and Visitors Authority announced a collaboration with Elon Musk's The Boring Company to develop and operate an autonomous people mover system for the Las Vegas Convention Center District.
International Pizza Expo includes green and gluten free
The International Pizza Expo at Las Vegas Convention Center included companies focused on vegan and gluten free, and plant-based pizza boxes. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
International Pizza Expo kicks off in Las Vegas
The first day of the International Pizza Expo at Las Vegas Convention Center is everything Pizza. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
T-Mobile program aids guests with sensory needs
A program at T-Mobile Arena is designed to provide a more sensory friendly experience for guests.
Photo Booth Expo
Danielle May talks about how Simple Booth transformed her Volkswagen bus into a business.
Nevada Gaming Commission's highest fines
The highest fines assessed by the Nevada Gaming Commission, according to commission Chairman Tony Alamo: 1) Wynn Resorts Ltd., $20 million, 2019 2) CG Technology (then known as Cantor G&W Holdings), $5.5 million, 2014 3) The Mirage, $5 million ($3 million fine, $2 million compensatory payment), 2003 4) Stardust, $3 million, 1985 5) Santa Fe Station, $2.2 million ($1.5 million fine, $700,000 compensatory payment), 2005 6) Las Vegas Sands, $2 million, 2016 7) CG Technology, $1.75 million, 2018 8) CG Technology, $1.5 million (also $25,000 in escrow for underpaid patrons), 2016 9) Caesars Entertainment, $1.5 million, 2015 10) Imperial Palace, $1.5 million, 1989 11) Peppermill Casinos, $1 million, 2014
Tiny Pipe Home vs Shipping Crate
A Tiny pipe home was displayed at the International Builders Show this week in Las Vegas.
Auto repair shortage affects Las Vegas
The auto repair industry is facing a national shortage of workers.
Franchising industry booming
Experts say Las Vegas is a hotbed for the franchise industry.
Africa Love owner talks about his store in Las Vegas
Mara Diakhate, owner of Africa Love, gift and decor store, talks about his store in Las Vegas. (Bizuayehu Tesfaye/ Las Vegas Review-Journal) @bizutesfaye
Developer gets approval to build homes at Bonnie Springs
The Clark County Planning Commission has approved a plan to build 20 homes on the site of Bonnie Springs Ranch. (Michael Quine/Las Vegas Review-Journal)
Dig This opens new location In Las Vegas
Remember when you were a kid and played with construction toys in the sand box? Dig This Las Vegas has the same idea, except instead of toy bulldozers, you get to play with the real thing. (Mat Luschek/Review-Journal)
Town Square developer Jim Stuart building again in Las Vegas
Las Vegas’ real estate bubble took developers on a wild ride, something Jim Stuart knows all too well. (Las Vegas Review-Journal)
Salon opens at Veterans Village
T.H.E. Salon, owned by Nicole Christie, celebrated their opening at the Veterans Village with a ribbon cutting ceremony.
Southwest Airlines considering Las Vegas-Hawaii flights
Southwest Airlines CEO Gary Kelly says the airline is "very focused" on Hawaii. Hawaiians have a strong presence in Las Vegas.The city’s unofficial status is “Hawaii’s ninth island.” In 2018, at least 2,958 people from Hawaii moved to Nevada. Of those, 88.7 percent moved into Clark County, according to driver license surrender data. According to the Las Vegas Convention and Visitors Authority, 310,249 people came to Las Vegas from Hawaii in 2018.
Fewer Nevadans are celebrating Valentine's Day
Fewer Nevadans are celebrating Valentine's Day. About 1.2 million Nevadans are expected to celebrate this year, a 5 percent drop from 2018. A growing number of people consider Valentine’s Day over-commercialized. Others weren’t interested in the holiday or had nobody to celebrate with. But spending is expected to rise. Those who do celebrate are buying for more people. The average American is expected to spend about $162 this year for Valentine’s Day, a 57 percent jump from a decade prior. Katherine Cullen, director of industry and consumer insights at NRF
Foreclosures of mansions in Las Vegas
Las Vegas was ground zero for America's foreclosure crisis after the housing bubble burst. (Eli Segall/Las Vegas Review-Journal)
Rick Helfenbein talks about the impact of tariffs on the clothing industry
MAGIC fashion convention showcases men's clothing trends
The MAGIC fashion convention has come to Las Vegas at the Mandalay Bay Convention Center to showcase some of the hottest clothing trends for men. (Nathan Asselin/Las Vegas Review-Journal)
Allegiant Air flight attendants learn how to handle a water landing
Field instructor Ashleigh Markel talks about training prospective flight attendants for Allegiant Air getting live training with a raft for a water landing at the Heritage Park Aquatic Complex in Henderson on Monday. (John Hornberg/Las Vegas Review-Journal)
Smith & Wollensky CEO Michael Feighery speaks
Smith & Wollensky CEO Michael Feighery speaks about the new Smith & Wollensky restaurant coming to the Grand Canal Shoppes at The Venetian in Las Vegas.
Smith & Wollensky CEO Michael Feighery speaks
Smith & Wollensky CEO Michael Feighery speaks about the new Smith & Wollensky restaurant coming to the Grand Canal Shoppes at The Venetian in Las Vegas.
Smith & Wollensky CEO Michael Feighery talks about Las Vegas return
Michael Feighery, CEO of Smith & Wollensky Restaurant Group, discusses the restaurant's upcoming return to the Las Vegas Strip.
Apartments to Come to Hughes Center
Developer Eric Cohen discusses his current building project at the Hughes Center office park in Las Vegas, Thursday, Jan. 31, 2019. Caroline Brehman/Las Vegas Review-Journal
Stratosphere to rebrand to The STRAT
The Stratosphere, a 1,150-foot-tall property in Las Vegas will be renamed The STRAT Hotel, Casino and Skypod.
Local designers’ picks for the Las Vegas Market
The trends that local interior designers are noticing at the Las Vegas Market this year. (Rachel Aston/Las Vegas Review-Journal)
TOP NEWS
Home Front Page Footer Listing