MGM Resorts posted improved fourth-quarter revenues in 2016 compared to the previous year, but the generated income fell far short of projections.
MGM Resorts CEO Jim Murren is encouraged heading in 2017 despite a disappointing fourth quarter for his company.
The Las Vegas-headquartered gaming and hospitality company reported net income of nearly $70 million for the final three months of the year. That translates to four cents per share, a far cry from the analysts’ consensus estimate of 21 cents for the quarter.
Though the company’s new property in Washington, DC, appropriately named National Harbor, brought in big money for MGM, and performance improved at the conglomerate’s 10 venues in Las Vegas and Atlantic City’s Borgata, the convention space underperformed.
Regardless of coming in well under fiscal expectations, CEO Jim Murren painted the earnings data in a rosy light.
‘The achievement of key financial and strategic milestones demonstrates our continued focus on driving profitability,’ Murren said in a release. ‘We are excited about the outlook for 2017.’
Investors on Wall Street don’t normally take the bait, and value numbers over words. Traded on the New York Stock Exchange, shares of MGM Resorts fell as much as nine percent following the financial announcement.
For the complete year, MGM generated a net income of $1.24 billion, or $1.94 per share. That’s a substantial improvement on the net loss of $1.05 billion MGM reported in 2015.
Though revenues disappointed, a bit of good news from MGM is that construction on its $950 million resort casino in Massachusetts is ahead of schedule. Originally planned to open sometime in the fall of 2018, the venue is now rumored to be considering a summer ceremony to first welcome guests.
The expedition is a result of the Massachusetts Department of Transportation exceeding expectations on refurbishing an elevated two-mile stretch of Interstate 91 near the casino. Highway officials say the road will be ready for full use in May 2018.
MGM Springfield has been under construction for 18 months. Per compliance documents filed earlier this month, the project is now more than 50 percent complete.
MGM Remains Optimistic
Investors may be running from MGM this week, but many financial analysts believe the long-term outlook continues to be bright for the company. MGM National Harbor has been a smashing success in the nation’s capital, and with Springfield on the way, MGM is expanding its reach into new US gambling markets.
Macau’s overall revenues are also seemingly stabilizing, as the city’s resorts switch focus from the VIP gambler to the mass market. MGM has been invested in the special Chinese gambling zone since its entry in 2007 with MGM Macau.
The company is doubling down on its Macau holdings by venturing into the Cotai Strip, a term coined by Sheldon Adelson and Las Vegas Sands to describe the new gaming hotbed area that sits atop reclaimed land. MGM Cotai, a 1,500-room hotel and casino with a price tag of $3 billion, is expected to open in the second half of 2017.
Atlantic City Casino Sector Starts Year With A Bang, Thanks to No Storms, Online, and House Luck
Atlantic City’s casinos began the year strongly, up almost eight percent in January on the previous year, continuing a modest upward trend for the sector in 2016.
New Jersey’s Casino Control Commission Chairman Matthew Levinson said that the absence of a major winter storm system was a big factor in January 2017’s uptick, but there were many other positive signs for the casino sector.
Total win for the casinos came in at $204.7 million, compared to $190.1 million for January 2016. Revenues, meanwhile were up 15.2 percent. To be fair, though, that jump is entirely to be expected, given the context.
In January 2016, much of the eastern seaboard was paralyzed by Storm Jonas, the biggest winter snow storm to hit the Mid-Atlantic since 1978. It saw travel bans in New York and New Jersey, with thousands of flights canceled, while strong winds and dangerously high tides brought flooding to the city.
‘The same storm that effectively wiped out a full weekend last year is one of the big reasons why revenues for the current casinos jumped by 15.2 percent last month,’ admitted Casino Control Commission Chairman Matthew Levinson said in an official statement.
Having said that, Atlantic City did have a winter storm this year, albeit not on quite the same scale, and, meanwhile, there were fewer January weekend days last month in comparison with a year ago, while most of the New Year’s holiday weekend fell in December.
It’s an encouraging start to the year, then, for a sector that has seen five of its 12 properties close over the past few years, most recently the Trump Taj, which shut its doors in October.
There is a sense, though, that the sector may now be rightsized because of the closures, a factor that it contributing to its recovery.
And being lucky helps, too. Levinson said that casinos were a lot luckier this January than last, winning more money against table game customers.
Online Gaming Continues to Grow
‘Thanks to a big swing in the hold percentage, table game revenue increased by 18 percent while internet gaming revenue increased by 28.6 percent,’ he said. ‘Even when results for the now-closed Taj Mahal are included, revenues are up.
‘Every single one of the current operators won more this January than in the same month last year, and Borgata had its best January ever.’
As Levinson suggests, online gaming in New Jersey continues to go from strength to strength. Revenue increased nearly 30 percent year over year, from $14.6 million to $18.8 million. Even online poker, so often the poor cousin to the online casino segment, was up almost 9 percent.
Mohegan Sun CEO Bobby Soper Resigns Amid Financial Investigation
Mohegan Sun CEO Bobby Soper has resigned from his executive role with the tribal gaming company as an investigation into potential financial regulatory shortcomings continues.
Mohegan Sun CEO Bobby Soper is walking away from the company after an investigation by the Pennsylvania Gaming Control Board turned up dirt. (Image: GGRAsia)
The Pennsylvania Gaming Control Board is determining whether ‘possible operational control deficiencies’ were incurred over the last year, and all present signs hint at some sort of supervisory breakdown.
The state gaming’s Office of Enforcement Control said this week in a preliminary report that Mohegan Sun Pocono will be subject to disciplinary action for failing to properly track free slot play. More importantly, the regulatory agency also charged three former employees, one being former VP of Player Development Robert Pellegrini, with facilitating a scam that cost the Pennsylvania casino over $400,000.
According to a guilty plea in late 2016, Pellegrini, another man, and a cocktail waitress colluded to win $478,350 by using free slot money at Mohegan Sun Pocono.
Amid the investigation, Soper submitted his resignation. The Mohegan Tribal Gaming Authority, based in Connecticut, said the notice was effective immediately but was produced on Soper’s own accord.
Mohegan Sun controls three casinos. In addition to its Mohegan Sun in Connecticut and its resort in the Pennsylvania Pocono Mountains, the company additionally operates the Resorts Casino in Atlantic City.
No Apparent Involvement
Soper became the chief executive of the Mohegan Tribal Gaming Authority in March of 2015. He previously served as CEO of the company’s Connecticut and Pennsylvania resorts.
Soper’s withdrawal from Mohegan Sun is apparently the result of his team’s failure to more closely oversee operations. There’s currently no evidence that links the CEO to the illegal slot play gambling.
However, it was recently revealed that Soper owned a five percent interest in a marketing company called ReferLocal. Mohegan Sun severed ties with the advertising firm last month after working with the group for six years.
Mohegan Sun says Soper is leaving the casino company to simply ‘pursue other opportunities.’
But the money picture paints another story. Financial filings for the first fiscal quarter of 2017 shows Mohegan Sun experienced a net loss of $51.6 million. The company cites higher corporate expenses as the culprit for the nearly 18 percent year-over-year decline.
String of Bad Luck
Though the company credits Soper with stabilizing its two regional casino resorts ‘in an ever-increasingly competitive industry,’ the authority has lost out in recent years on potential further investments in the coveted northeastern United States.
Most notably is the group’s failure to win a gaming license in Massachusetts. The group had submitted a bid in 2014 to build a $1.1 billion casino resort in the Bay State’s sought-after Boston area.
Mohegan Sun lost to Wynn Resorts, the Las Vegas gaming conglomerate that proposed a $1.6 billion resort that is now expected to come in around $2 billion.
With its Connecticut property opening back in 1996, Mohegan Sun was one of the first major tribal casino players in the northeast. Now 21 years later, the authority has only two additional casinos under its corporate umbrella.
Georgia Convenience Store Gambling Raid Puts Three in Jail
A convenience store gambling operation has been shutdown after police in Georgia raided the suspected business this week.
The Marietta Police Department said in a press release that a two-year surveillance into two Gantts Food grocery stores began as a drug trafficking sting, but transitioned into an illegal gambling and money laundering investigation.
Three men are being charged with felonies for allegedly running an illegal convenience store gambling enterprise that featured coin-based slot machines with cash winnings at stake myfreepokies.com. (Image: Cobb County Sheriff’s Office)
After obtaining search warrants for the locations and the owner’s home, law enforcement confiscated 15 unlicensed coin-operated slot machines. They also discovered $250,000 in cash, a large bag of jewelry, eight computers, and five luxury vehicles.
Gantt Foods owner Khubaib Hussain, along with two workers, Samson Beye and Arif Muhammad, were arrested and each charged with a commercial gambling felony. After spending time in a Cobb County jail Tuesday night, the three posted bail, with Hussain’s being the costliest at $38,720. The others were released on just $2,970.
It’s unclear if Hussain owns other businesses in addition to his convenience stores. The vehicles seized by police include a Range Rover and Mercedes-Benz SUV.
The Peach State is currently mulling a legislative bill that would bring Georgia its first land-based gambling establishments.
Georgia is one of just a handful of remaining states that doesn’t have commercial or tribal casinos, nor pari-mutuel wagering. The state does, however, have a bountiful lottery that provided over $1 billion for education last year alone.
It’s unclear why it took Marietta police more than 24 months to carryout the sting on Hussain’s businesses. According to one news report, a regular customer said the slot machines were in plain view and were regularly occupied by patrons.
‘People come and sit at the machines and they smoke their cigarettes,’ a resident told FOX 5. It’s also worth noting that Georgia prohibits smoking in all enclosed public places.
Georgia does allow stores like Hussain’s to offer coin amusement machines, but only store credit or lottery tickets are to be won. Paying out prizes in cash is illegal.
Law enforcement agencies are trying to crackdown on illegal gambling throughout the state. Also this week, an alleged online sports betting network being run by a 54-year-old Woodstock resident was discovered. The operator is accused of taking bets on college and professional sports through an illegal internet site.
The casino bill in the Georgia State Capitol would effectively curtail operations like Hussain’s should it one day become law.
The gambling bill, introduced by State Senator Brandon Beach (R-Alpharetta), calls for the construction of two casino resorts in Georgia. Atlanta would be an obvious choice for one of the locations.
Marietta is just a short drive northwest from Atlanta. Assuming slots machines weren’t banned in the state, Hussain’s rogue convenience store gambling establishment would theoretically receive fewer bets, ultimately leading to less money going into his wallet.
Numerous gaming bigwigs are interested in bidding on Atlanta should the state authorize a casino. The list of interested parties includes Wynn Resorts, Las Vegas Sands, Penn National Gaming, Golden Nugget, and Boyd Gaming.