MGM Resorts: China and Las Vegas success drives growth in 2023
During what was another busy year for MGM, group revenue in 2023 amounted to $16.20bn (£12.85bn/€15.12bn). This was 23.7% ahead of the previous year amid growth across two key markets.
Las Vegas remains the primary source of revenue for MGM, with revenue here rising 4.8% year-on-year. This was helped by the acquisition of The Cosmopolitan in May 2022 and the impact of major events in the city, including the inaugural Formula One race in November.
However, MGM China reported the most growth during 2023. MGM put this down to the removal of all Covid-19 restrictions, with these having impacted its performance in 2022.
MGM noted some decline in its Regional Operations business, but this was more than offset by growth in the “management and other operations” segment. This includes BetMGM, the joint venture with Entain, which hit full-year targets and expanded outside the US by going live in the UK. Last week, BetMGM also struck up a partnership with X.
CEO Hornbuckle hails resilience of MGM
Speaking on an investor call, MGM CEO Bill Hornbuckle was full of praise for the business. He said its ability to achieve record results despite having to contend with several challenges, including the cyber-attack on its systems in September, underscored its “resilience”.
“Seven of our domestic properties set individual records for adjusted property EBITDAR for the full year,” Hornbuckle said. “These outstanding accomplishments underscore the resilience and the agility of our team in navigating a complex operating year.
“The strength and resiliency of the Las Vegas market has been particularly impressive. In Macau, we ended 2023 with an all-time record adjusted EBITDAR for the quarter and the full year. Our robust market share was comfortably in the mid-teens and continued its upward trend in January.
“In digital, BetMGM made its full-year 2023 targets in both net revenue and second-half profitability. In 2024, we will soon be live in 29 markets with the launch of North Carolina next month.”
Viva Las Vegas and making moves in Macau
Breaking down the 2024 performance, casino activity was by far the main source of revenue at $8.09bn. Rooms revenue hit $3.50bn, food and beverage $2.89bn and entertainment, retail and other $1.64bn. A further $45.7m was noted in reimbursed cash.
Las Vegas Strip revenue topped $8.80bn for the year, up 4.8% from 2022 on the back of a busy year in Nevada. The results included a full year of operations at The Cosmopolitan but not The Mirage, which was sold to Hard Rock International in December 2022.
Regional operations revenue slipped 3.8% to $3.67bn for the year. This was partly impacted by the sale of operations at Gold Strike Tunica Resort in Mississippi to CNE Gaming Holdings in February.
As for China, MGM noted significant growth in Macau, with revenue rocketing 368.1% to $3.15bn. MGM is now operating normally in the region again after being subject to Covid-19 restrictions for several years.
Elsewhere, management and other operations revenue climbed 125.9% to $541.2m. This was helped with the UK launch of BetMGM, with MGM choosing to partner with LeoVegas on the project. Despite BetMGM being a joint venture with Entain, the UK expansion does not include any input from Entain.
Operating profit rises 31.4%
In terms of operating costs, spending increased 23.2% to $14.21bn in 2023. General and administrative costs were the main outgoing at $4.70bn, ahead of casino spend at $4.32bn. This pushed operating profit up 31.4% to $1.89bn.
An additional $418.7m was reported in non-operating costs, leaving a pre-tax profit of $1.47bn, up 62.9% year-on-year. MGM paid $157.8m in tax and discounted $172.7m in profit from non-controlling interests.
As such, it ended 2023 with a net profit of $1.14bn. This was 22.5% lower than $1.47bn in 2022, although the previous year included income from the Mirage sale.
It was also noted that full year adjusted EBITDAR at MGM amounted to $4.59bn.
MGM ends 2023 on a high
As for the final quarter of 2023, revenue in Q4 was up 21.8% to $4.38bn. Las Vegas revenue increased 3.2% to $2.37bn and China 462.4% to $982.5m. Revenue from management and other operations was 15.8% higher at $149.1m, but regional operations revenue declined 11.9% to $873.4m.
Operating costs were up 11.5% to $3.96bn, while MGM posted an operating profit of $419.3m, in contrast to a $1.9m loss in Q4 of 2022. Non-operating expenses hit $99.3m
Pre-tax profit reached $320.1m, compared to the previous year’s $34.1m loss. MGM also received $59.5m in tax benefit but discounted $66.2m in profit from non-controlling interests.
As such, it ended Q4 with a net profit of $313.5m, up 10.4% on last year. In addition, MGM said adjusted EBITDAR for the quarter reached $1.19bn.
“I want to thank all of our dedicated employees who consistently strive to deliver on world-class service to our guests,” Hornbuckle said.
Making progress in New York and Osaka
Hornbuckle also referenced ongoing efforts by MGM to launch in both New York and Osaka in Japan.
In November, MGM unveiled its vision to transform its Empire City Casino in New York into a full-scale commercial casino. Other planned amenities include a BetMGM Sportsbook and Lounge betting facility, restaurants and an entertainment venue.
However, the project hinges on MGM securing one of the three full commercial casino licences currently available in New York. The timeline for these licences will be announced in the coming months, with the bidding process having launched earlier this year.
The request for proposal process is underway, with Hornbuckle hoping for approval before the end of the year.
“We anticipate submitting our full application to the government by the middle of this year with a decision expected shortly thereafter,” Hornbuckle said. “We’re hopeful that by the end of 2024, something is awarded. But we don’t know any more, unfortunately.
Meanwhile, certification for building an integrated casino resort in Osaka was finalised in late September. MGM is working with Orix Corporation, with Japan’s ministry of land, infrastructure, transport and tourism having already approved the project. Hornbuckle said MGM is on track to commence early construction efforts in 2025, with the aim of opening in 2030.