MGM Resorts announced it will focus on its iGaming operations after reporting a 60% drop in revenue for 2020.
Operations Strongly Affected by Covid-19 in 2020
Leading casino operator MGM Resorts reported a 60% decrease in revenue in 2020, down $1.03 billion to $5.16 billion year on year, and announced it will expand its online gaming operations. The gambling industry took a severe hit due to lockdowns and decreased operations across casinos during the Covid-19 pandemic.
Although MGM reduced its expenses by 35.6% in 2020, they were still higher that the revenue generated that year. The majority of the income generated in 2020 came from the group’s brick-and-mortar operations, at $2.87 billion, but the segment has declined by 54.9% compared to 2019.
Hotel turnover generated $830.4 million, down 65.3% year on year, as dining and beverage services decreased by 67.6% to $696 million. Retail, entertainment, and other activities reached $519 million, down 64.9%. Reimbursed costs brought an additional $244.9 million, a 43.9% drop compared to the previous year.
MGM said that its properties on the Las Vegas Strip remained the main revenue source, although they generated 61.5% less income in 2020, with $2.25 billion. Other operations in the US were not as impacted by the pandemic but still dropped by 44.6% to $1.97 billion.
The group’s branch in China was particularly affected by travel restrictions and reduced capacity, with a 77.4% drop in revenue.
Final Net Loss of $1.03 Billion
MGM reported a $642.4 million operating loss for 2020, following $3.94 billion in operating profit in 2019, while its iGaming joint-venture with Entain, BetMGM, made a $124 million operating loss despite quick growth over the year.
The group reported a $1.32 billion net loss after various affiliate-related costs and taxes, compared to a $2.85 billion profit in 2019. Not counting the losses linked to noncontrolling assets, MGM’s final net loss amounted $1.03 billion. In Q4, turnover dropped by 53.2% to $1.49 billion, including $963.8 million in casino revenue, down 40.9%.
MGM CEO and President Bill Hornbuckle said the group will carry on its expansion plan for online gaming activities, and that he is confident MGM will get back on its feet.
“We remain confident in the long-term recovery of our business,”
Bill Hornbuckle, MGM Resorts International CEO and President
Hornbuckle said the company has “strengthened [its] operational foundation through cost efficiencies” that position the business “for sustainable growth”, while measures and restrictions to reduce the spread of the virus are starting to ease up. He shared that BetMGM will play a big part in the company’s recovery.
Focus on iGaming
BetMGM launched in seven states so far, including in Michigan, Virginia, and Iowa in January this year, and Hornbuckle stated that this number is expected to grow by the end of 2021, with 20 markets in total. “We are engaged on the pandemic response while staying focused on the future,” he added.
MGM offered to buy all of Entain’s stock for about $11 billion, a bid rejected by the latter, which argued that its “significantly [undervalued]” the company. As a result, MGM retracted its offer.
Hornbuckle said that MGM’s plan is to diversify its revenue streams and develop its footprint in the iGaming market “on a global basis”, despite the fact that the deal had fallen through.