MGM admits doubts over Nevada poker launch
CFO says that operator "hasn't ruled out" releasing an offering but hasn't "given it a green light either"
MGM Resorts International has revealed that it is unsure whether to launch an online poker offering in Nevada, admitting that it will not “be the first or a pioneer from the state’s perspective”.
In an interview with Reuters following the publication of the group’s first quarter results, CFO Dan D’Arrigo said that the company would “have to make an assessment on the cost to operate that space”.
“We haven’t ruled it out, but we haven’t given it a green light either,” he added.
CEO Jim Murren reiterated that the company “obviously would still prefer a federal solution,” which he said would “have comprehensive law-enforcement controls and consistent regulation” during the company’s earnings call.
However Murren went on to explain that while regulation on a state-by-state level was “not the preferable approach”, MGM would look to participate in these markets, highlighting intrastate compacts as a strategy for boosting revenues.
“The opportunity will be to have states compact with one another to create the liquidity that is necessary for poker,” Murren said, adding that the operator’s partnership with bwin.party and Boyd represents a “big help” in that respect.
Murren and D’Arrigo’s comments came after Ultimate Poker became the first operator to launch a real-money poker offering in Nevada.
The first three months of 2013 saw consolidated net revenue increase 3% year-on-year to US$2.4bn, aided by strong performance from its Las Vegas resorts and a “record first quarter” at MGM China. Murren revealed that the results were “the best [MGM] has reported since the beginning of the [economic] downturn five years ago”.
This followed a $1.2bn net loss for the final quarter of 2012, due to an impairment charge on Atlantic City’s Borgata Casino. The operator’s 50% share of the casino was placed in trust since 2010, after New Jersey regulators raised concerns over a deal between MGM and Pansy Ho, whose family is alleged to have links to organised crime.
As a result it was blocked from applying to be re-licensed in the Garden State until at least 30 months after any sale of its Borgata stake.
In February the New Jersey Casino Control Commission approved the company’s petition to retain its stake in the casino, and D’Arrigo explained that the company’s “first priority in New Jersey is [the] reapplication process, and that is underway”.
“We still have the trust arrangement that we’re governed under. It sits at just over about $130 million in cash in that trust arrangement. So the process is underway in New Jersey,” he concluded.