Buckle Up, In a Thrilling Game of High-stakes Poker MGM Resorts Plans World Domination
Perhaps the salient clue lies in the name: LeoVegas, a cheeky appropriation of two of the biggest branding images of world gambling — the roaring, dominant Lion of MGM and the slick, neon-lit glitter of the famous strip.
Perhaps it was only a matter of time before Big Bill Hornbuckle, the all-powerful CEO of MGM Resorts, arguably the biggest beast in land-based US gaming and entertainment came calling to consume the tasty Swedish “upstart” for lunch, if not breakfast.
Now Hornbuckle is betting his house—and his own personal future–on the US$600 million (£531.8m/€605.5m) acquisition of Stockholm-based LeoVegas, founded by Gustaf Hagman in 2011.
MGM Resorts sits astride a land-based casino empire like no other.
Employing around 75,000 people, it owns and runs 29 mega “destinations” in the Chinese entrepôt of Macao and across the United States, in Las Vegas, Massachusetts, Detroit, Mississippi, Maryland and New Jersey.
But the future of gambling, the real explosive growth, lies in iGaming – whatever the temporary post-pandemic bounce-back on Vegas’ storied strip – and other casino floors. And doesn’t Hornbuckle, like every executive worth his dollar, know this.
So LeoVegas, the name with the perfect fit, segues effortlessly into his vision of the future and has been chosen as the vehicle that will drive MGM’s international online expansion.
As for the domestic North American market, Hornbuckle will persist with the loss-making BetMGM joint-venture with Britain’s Entain Group; whose current success, or status, is measured not so much it how much it makes but in how little it loses.
Referring to LeoVegas, Hornbuckle enthused: “We love the team. We love the operating environment it has, the system it has. It’s got a full slate of iGaming opportunities. Sweden is the benchmark; about 35 per cent of its business comes from there.
“So we’ve got a sports betting product. It’s got all of the tools. We look to add on to it with live dealer. We’re looking at a studio increment that could be added on to this thing.
“And so we see it as a cornerstone to grow rest of world.
“We see [LeoVegas] as a leading opportunity for us and a vehicle to do that.”
The MGM lion began stalking the Swedish iGamers in May, when they bid a price of Swedish Krona SEK61 a share, valuing the company at some US$607 million.
The offer–a near-50 per cent premium on its share price at that time–was accepted, unanimously, by the LeoVegas board.
Meantime, boosted by all-time record Las Vegas revenues, up 67 per cent to US$2.3 billion (£2.03bn/€2.32bn), year-on-year, overall MGM revenues grew by 26 per cent in Q3 to US$3.42 billion (£3.03bn/€3.45bn); although Adjusted EBITDA fell 20 per cent, y-on-y, to US$949.8 million (£841.84m/€958.52m) because of a massive write-down on Macau operations.
“We’re proud to report the best quarter in our Las Vegas Strip history, driven by the continued appeal of our entertainment and meetings offerings,” said Hornbuckle.
“We achieved several key milestones during the quarter, including closing on the acquisition of LeoVegas and submitting our tender for a new gaming concession to the Macau SAR Government.
“Our outlook remains promising, with continued progress in our operations with BetMGM and development initiatives in New York and Japan as well as strong bookings into 2023 in our domestic operations.”
MGM’s vision and appetite to be the world’s premier gaming entertainment company remains strong.
But there’s still a mighty way to go.
Although BetMGM revenues hit US1 billion (£885.2m) for the first nine months of the year, it still recorded a loss of US$23.6 million (£20.9m/€28.81m) over Q3 and the iGaming sportsbook is significantly trailing market leaders FanDuel and DraftKings.
Newly-acquired LeoVegas is not exactly a bundle of joy either.
The Swedish group reported a year-on-year drop in revenue and slipped to a net loss during its final financial quarter as an independent entity.
LeoVegas Q3 revenue fell 0.7 per cent, year-on-year, to €98.7 million (£86.68m/US$97.8m).
Although Nordic revenue was up by 20 per cent during the quarter, its rest-of-Europe take fell by almost the same percentage and rest-of-world revenue dropped 10 per cent.
Pre-tax loss totalled €10.8 million (£9.48m/US$10.7m), compared to €4.1 million (£3.6m/US$4.06m) profit in Q3 2021.
Nevertheless, it would seem that MGM Resorts is determined to push ahead with its blueprint for world domination.