Sports betting is still a ways off in Ohio, but New Jersey sportsbooks are up and running. Check out DraftKings Sportsbook!
Hard Rock Rocksino Northfield Park is joining the MGM Resorts portfolio, providing MGM entry into the Ohio gaming market.
MGM Resorts International and its real estate investment trust, MGM Growth Properties LLC (MGP) are doing a bit of shuffling around of a newly acquired Ohio property.
MGM Resorts is acquiring the operating assets of the Rocksino from MGP. MGP will lease the actual property associated with the Rocksino from a subsidiary of MGP.
Jim Murren, chairman & CEO of MGM International talked about the acquisition in a statement.
“We are pleased to welcome the Hard Rock Rocksino and more than 700 employees to the MGM Resorts family and look forward to working with them during this transition.
Since opening its doors in 2013, the Rocksino has cemented itself as the market leader in gaming and entertainment due to its superior asset quality, premium location and dedicated employees. We believe the Rocksino is a great fit for the MGM portfolio and will benefit from our capabilities as a leading global entertainment company and our award-winning M life Rewards Program. We anticipate revenue and profit growth from this combination.”
About the Ohio casino deal
MGP finalized the $1 billion purchase of the Rocksino from Milstein Entertainment in July. Now, MGM Resorts will lease the casino from the trust for $275 million.
Located between Cleveland and Akron, Hard Rock Rocksino is a gaming destination with retail, restaurants, entertainment, and the Northfield Park horse racetrack. The Rocksino houses over 2,300 video lottery terminals.
Hard Rock Rocksino has been one of the best performing casinos in Ohio for most of the past three years. For the 12 months ending June 30, the Rocksino reported approximately $293 million in net revenue.
As part of MGM Resorts, MGP will increase the Rocksino’s annual rent payment by $60 million. According to the master lease terms, 90 percent of the rent will be fixed and grow at two percent per year through 2022.
James Stewart, CEO of MGP, spoke of the deal:
“We are thrilled to have partnered with MGM Resorts for this quality asset. While there was significant third-party interest in the property, MGM Resorts offered a rental stream at the high end of our expected range and the continued security of our revenues as demonstrated by the strong rent coverage via the master lease. We expect this transaction to be accretive to AFFO, positioning the company for future dividend growth and further exhibiting our commitment to maximize shareholder value.”
Ohio sports betting taking its time to come to market
MGM continues to expand its national presence. Speculation might attribute its aggressive growth to the legalization of sports betting across the U.S.
Its recent deal with Boyd Gaming is a perfect example. The agreement gives MGM and Boyd entry into 15 gaming markets.
It appears MGM will have to be patient in Ohio, however.
In July, things looked promising for the Buckeye State. Lawmakers introduced sports betting bills in both the Ohio House of Representatives and Senate.
On the other hand, not everyone in the state is hoping to be an early adopter of sports betting.
Not long after the Supreme Court ruled PASPA unconstitutional, Ohio Gov. John Kasich through his spokesman Jim Lynch commented to the Columbus Dispatch.
“Expanding gambling has not been a priority for this administration, and that remains unchanged. We’re aware of the ruling and looking to see what impact it will immediately have on Ohio policies.”
A big debate on sports betting is unlikely to happen before the highly-anticipated mid-term elections. Ohio Senate President Larry Obhof confirmed that sentiment when saying legislators wouldn’t take up measures to legalize sports betting until after the November elections.
Of course, that means sports betting is unlikely to make an appearance in Ohio before 2019.
While not ideal, MGM is not playing a short game. Everything points to the contrary.
MGM is positioning itself to capitalize on the sports betting craze wherever and whenever it happens. Its latest purchase in Ohio is just another example of that.
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