Gaming observers awoke yesterday to the news that MGM Resorts International wants to be shot of struggling MGM Springfield, a $960 million albatross. No great surprise there. CEO Bill Hornbuckle had washed his hands of it a year ago, literally shrugging and telling the Boston Globe, “It is what it is.” Plus, the property president left late last year under murky circumstances and replaced with Louis “Louie” Theros, former legal counsel of MGM Grand Detroit. A curious choice, on the face of it. MGM grossly overestimated the regional pull of a Springfield casino and those chickens have evidently come home to roost.
What was surprising was that MGM is reported to also be peddling MGM Northfield Park in Ohio. It doesn’t make enormously more money than MGM Springfield (about $26 million a month to $22 million). But it operates in a much more competitive market and, despite its lack of table games, is consistently the number-one casino in the state. MGM issued a starchy non-denial denial of the sale talk … but the trouble is that once this kind of discussion gets out, it’s impossible to walk it back. Springfield and Northfield Park will now be seen as MGM’s red-headed stepchildren.
The bigger question is: Why? According to the Globe, MGM execs are “frustrated” that the stock price isn’t higher. But it’s hard to see how selling a couple of regional casinos moves that needle. Could the company be facing a cash crunch? It’s going to cost as much as $1 billion just to get a New York City casino concession, never mind the planned upgrades to MGM Empire City. And construction finally begins this summer in Osaka, which will devour countless billions, even if it is a joint venture. This looks like a desperation move and the industry knows it, which will make it difficult for Hornbuckle to drive a hard bargain.
Never the steadiest hand at the tiller (Japan? Really?), addlepated Bally’s Corp. Chairman Soo Kim has gotten it into his head again to take the company private via his Standard General hedge fund. He tried two years ago, at $38/share. Now he’s back with a fire-sale offer of $15/share. The bid, if accepted, would value Bally’s at $684 million—less than half the projected cost of Bally’s Chicago (above). It wouldn’t even be enough to cover the $800 million shortfall on that white elephant. That tells you something about how little Bally’s has in the cupboard. “The sharp decrease in valuation is reflective of some of the operator’s recent financial and operational struggles, including the sluggish performance of its Bally Bet sportsbook product, which was ultimately outsourced to Kambi last year,” reported Global Gaming Business. A venture into sportscasting has also been a disaster.
If that weren’t enough, Bally’s is groaning under $3.6 billion in debt, with only $163 million on hand. Even the pro-casino Chicago Tribune has bailed on Bally’s, calling for Chicago to have a contingency plan in place should the company falter. Faced with these issues, Bally’s execs chose to stonewall when facing the Nevada Gaming Control Board (which rubber-stamped their license applications anyway). Standard General, which specializes in buying bankrupt casinos, is no stranger to Las Vegas, having purchased the then-Aliante Station when Station Casinos was at its low ebb. Control Board members would do well to remember that, which they evidently don’t.
Kim’s buyout plan involves some magical thinking to the effect that it will make Bally’s Chicago easier to finance. Other than juicing the stock price, this is the only motivation that has been offered. If Kim succeeds in getting the elusive $800 million from non-Bally’s sources, effectively ceding the Chicago megaresort in order to get it built, he still won’t have a pot to piss in as regards redevelopment of the Tropicana Las Vegas site, where Bally’s is a paper tiger, let alone a new venture into Lake of the Ozarks. As we’ve said before, Focus, Soo. Focus!
Pesky, paternalistic politico Rep. Paul Tonko (D) is at it again. He’s back with a monstrous proposal to re-outlaw sports betting at the federal level. Individual states would have to plead their case with Washington, D.C. The federal guvmint would then have three years to ponder the matter before acting. And maybe not even then, as a Kaftkaesque provision allows for renewal of applications on … and on … and on. In essence, this would bring back the Bradley Act, which the Supreme Court tossed six years ago. One has come to expect this kind of “strong father” governance from the right, whether on abortion or animal welfare (google the EATS Act, if you want your gorge to rise). But Tonko shows that ostensible liberals can be just as bad when they set their minds to it.
Tonko’s outrageous SAFE Bet Act would also ban advertising of sports betting save during the graveyard shift (10 p.m.-8 a.m.). Bettors would be restricted to five deposits per day and operators would be forbidden to use AI to track them. Tonko clearly doesn’t trust you to use your own money. (God forbid he should take up the cudgels against Internet erotica.) He would also re-outlaw prop bets on collegiate and amateur sports. Self-exclusion lists would be federalized and an ominous-sounding study of “the incidence and outcomes of sports betting nationwide” would be conducted by the Substance Abuse & Mental Health Services Administration.
Judging by an official précis of the Tonko bill draft, states with sports betting wouldn’t even be grandfathered but would have to re-apply for permission to offer what they already do. It’s unclear whether Congress has the stomach to tackle this and, thankfully, the House of Representatives has other snipe hunts to conduct at the moment. Also, SCOTUS may have as little use for this as it did for the Bradley Act, especially given the anti-federal shift of the Supremes since they shot the Bradley Act down. Let’s hope so.