MGM posts 36% revenue hike in Q1 as it targets digital growth, international expansion to Japan and UAE

MGM Resorts has posted an overall revenue increase of 36% to $3.9 billion, and record Q1 Adjusted Property EBITDAR for Las Vegas Strip Resorts, up 31% YOY, in its financial report for the first quarter of 2023. Officials for the company, which topped Wall Street estimates, cited gains both in Vegas and Macau, and said Dubai or Abu Dhabi might greenlight gaming this year.

The all-time high Q1 Adjusted Property EBITDA for the Strip marked the seventh consecutive quarterly record, and drove much of the growth during the three-month period. But also as impressive was Macau’s performance, with the company finally seeming to be bouncing back from the pandemic. MGM China Adjusted Property EBITDAR amounted to $169 million, 88% recovery versus the first quarter of pre-Covid 2019, and net revenue was up 130% YOY.

As its current operations keep delivering solid results, MGM is targeting new opportunities for growth and adjusting the size of its portfolio where needed. With that goal in mind, during Q1 the company closed on the sale of the operations of Mississippi’s Gold Strike Tunica to Cherokee Nation Businesses for $450 million and received official certification of an Area Development Plan for Osaka, where the business is set to develop Japan’s first casino. An opening of MGM’s nearly $10 billion integrated resort in Osaka is now expected in 2030.

Rendering for MGM's proposed Osaka resort

Strong Q1 performance paves the way for future growth

"MGM Resorts is executing across all of its geographies and channels with record first quarter Las Vegas Strip Adjusted Property EBITDAR, consistently strong Regional Operations profit, MGM China's swift return to profitability, and BetMGM's anticipated positive earnings later this year," said Bill Hornbuckle, Chief Executive Officer and President of MGM Resorts. 

Beyond continued strong results, Hornbuckle said MGM’s future growth and expansion plans are “promising,” citing April’s approval of the development plan in Osaka. Additionally, the firm is part of the application process for one of three licenses to be made available in the downstate New York area. It is widely believed that one of the permits could be awarded to slots-only MGM’s Empire City Casino at Yonkers Raceway, allowing it to expand its offerings.

Elsewhere in his update, Hornbuckle said global digital expansion plans remain “a major focus” as the firm continues to grow the LeoVegas and the MGM digital brands worldwide. Along with the Q1 report, the business announced its LeoVegas subsidiary, which became part of MGM Resorts last year, has signed an agreement to acquire game development company Push Gaming. The deal is touted as “the first major investment by LeoVegas” since joining MGM.

Future growth in Vegas might also be driven by the Oakland Athletics’ potential move to Southern Nevada. Given the location and the conversation of a pedestrian bridge from T-Mobile Arena to the proposed stadium site, MGM thinks the move could bring about 400,000 tourists a year to the valley that wouldn’t have otherwise come. Last month, the A’s announced the team had signed a binding purchase agreement with Station Casinos' parent company, Red Rock Resorts, to purchase 49 acres at Tropicana Avenue and Dean Martin Drive.

Oakland Athletics

"MGM Resorts achieved net cash flow provided by operating activities of $704 million and Free Cash Flow of $564 million during the first quarter," added Jonathan Halkyard, Chief Financial Officer and Treasurer of MGM Resorts. "Our balance sheet continues to improve as we received $450 million in gross cash proceeds from the sale of Gold Strike Tunica and repaid $1.25 billion in unsecured notes upon maturity during the quarter.”

“With $4.5 billion of cash on the balance sheet, we expect to continue to return capital to our shareholders through ongoing stock repurchases and pursue long-term growth opportunities through international digital acquisitions and the development opportunities we have with Japan and New York,” Halkyard further commented.

Gaming expansion in UAE?

In conversation with investors, MGM executives said they are hopeful that gaming may be approved by the United Arab Emirates in the near future, possibly as soon as this year. The Vegas-based casino operator announced back in 2017 plans for an MGM Resort in Dubai that wouldn’t have gaming but would instead have 1,000 rooms and 10 villas. But officials now believe they might be able to run a casino in a Gulf State someday.

Bill Hornbuckle

“As it relates to Dubai, that property continues to evolve,” Hornbuckle said, as reported by Skift. “We’re the managers, but the owners want to upgrade the property, I think, with gaming in mind. But it’s up to Abu Dhabi and the national government to ultimately decide. … We’re hoping ‘any day.’ But I believe as the summer fulfills itself, we’ll hear more news on that.”

“We have had people on the ground there basically nonstop since the first of the year, trying to understand the opportunity in Abu Dhabi and then ultimately, if it will open up,” Hornbuckle added. “If they pass on it, [the opportunity] will open up to the other Emirates. Whether the rulers of each Emirate then take it upon themselves to approve it is up to them.”

MGM’s plans for Abu Dhabi come as the company faces competition in the region from Wynn Resorts, which is spending $3.9 billion to develop 115 acres on Al Marjan Island, made up of four islands, in the emirate of Ras Al Khaimah. The property is expected to have a gaming area, although that aspect of the resort has yet to be approved.

See MGM's full Q1 report here.