Mojito Pointe: Why MGM did it

Maybe they were just charmed by Dan Lee‘s babyish face (left) but leadership at MGM Resorts International can cite of plenty of other reasons for throwing in on Lee’s Mojito Pointe project … which may be rechristened with an MGM brand name. With no disrespect to overseas prospects, it’s the closest MGM’s come to a sure thing in quite a while. The Lake Charles market has, with 4Q11 still to go, elbowed past New Orleans to become the second-largest casino market in the Pelican State, $508 million to $482 million. (Shreveport is still tops at $565 million YTD.) Lake Charles is also outperforming all other markets in the state, up 5.5% so far. Only Baton Rouge shows comparable growth potential, which Pinnacle Entertainment stands to reap shortly. Revenue comparisons for 2011 on the lake are predominantly positive, especially for Pinnacle’s L’Auberge du Lac and Boyd Gaming‘s Delta Downs racino. Plus, the area will lose some casino inventory if Isle of Capri Casinos succeeds in selling off the smaller of its two Lake Charles riverboats.

Lastly — but by no means leastly — MGM’s nearest M Life socket to the Louisiana and Texas player bases is Beau Rivage, in Biloxi. Not only do Boyd and Caesars Entertainment have direct pipelines from Louisiana to Las Vegas, rival Wynn Resorts has hooked up with Pinnacle while Penn National Gaming (currently the #1 operator in Baton Rouge) has planted its flag at M Resort — where MGM used to hold a minority interest. (Oops.) Not only will MGM’s exposure be relatively limited, since it will be in charge of daily operations at Mojito Pointe, if things go south it will have nobody to blame but itself. It would require real effort to screw this up.