MGM Resorts Gets $700M Boost in Deal with Real Estate Trust

MGM Resorts Gets $700M Boost in Deal with Real Estate Trust
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MGM Resorts International has added $700 million from its real estate investment trust, MGM Growth Properties, to help it through another surge in coronavirus cases and to possibly take advantage of a growing U.S. sports betting market.

MGM Resorts announced this week that MGM Growth Properties has redeemed approximately 23.5 million of MGM Resorts' operating partnership units, reducing the casino company’s ownership stake to 53%, according to a news release.

The added cash to MGM Resorts’ balance sheet represents the remaining amount under the agreement with MGM Growth to purchase up to $1.4 billion of MGM Resorts' units for cash, according to the release. MGM Growth owns the land of eight Las Vegas properties, in addition to the real estate of other properties in the U.S.

MGM Resorts said in the release that it intends to use the $700 million in cash for general corporate purposes. That could help BetMGM, the joint venture between GVC Holdings and MGM Resorts, as it looks to launch in additional states.

“Today's announcement reflects our continued focus on enhancing our balance sheet to strengthen our financial flexibility,” Bill Hornbuckle, CEO and president of MGM Resorts, said in the news release. “As the pandemic continues to impact operations at our properties across the U.S., we believe the opportunistic exercise of our redemption right as well as our recent senior notes offering allow us to continue pursuing our strategic goals while navigating the crisis.”

Upon completion of the transaction, MGM Resorts will have approximately 149 million units, according to the release. In addition, MGM Resorts holds other real estate assets, including its ownership of MGM Springfield, its 50% interest in CityCenter in Las Vegas and its 56% interest in MGM China.

“Our recent capital raise will allow us to fully fund this final redemption under the waiver agreement with cash on hand while still maintaining a balance sheet positioned for future growth,” James Stewart, CEO of MGM Growth Properties, said in the release.

BetMGM Positioned for Growth

BetMGM is live in eight states and is poised to enter more markets, including Michigan, which is expected to launch this month.

After receiving a license to offer online casino and sports betting in Pennsylvania, BetMGM is anticipating going live with online casino gaming on Friday. No date has been set for when its online sports betting app will debut in Pennsylvania.

Less than a month ago, BetMGM announced the launch of live casino in New Jersey with an Evolution partnership deal.

The BetMGM app launched in Tennessee on Nov. 1, the first day the sports betting market was live.

BetMGM is partners with six NFL teams: Pittsburgh Steelers, Las Vegas Raiders, New York Jets, Detroit Lions, Denver Broncos and Tennessee Titans. It also has partnerships with the NHL’s Las Vegas Golden Knights and Detroit Red Wings and the WNBA’s Las Vegas Aces.

In August, NASCAR named BetMGM an authorized gaming operator and the partnership could lead to more in-race betting options. BetMGM can present NASCAR offerings on its mobile app, social media channels and in its retail sportsbooks.

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