Like The Boy Scouts, MGM Wants To Be Prepared If Sports Betting Happens

Posted on April 30, 2018

Sports betting enthusiasts are sitting on the edge of their seats awaiting a Supreme Court decision in the New Jersey sports betting case.

Casinos, however, are doing more than waiting, they are busy planning. In recent earnings calls, MGM, Penn National, and Churchill Downs (CDI) all mentioned sports betting and the potential impact on their bottom lines.

MGM is positioned to be the biggest benefactor of legalized sports betting

MGM is moving ahead with plans to take advantage of the legalization of sports betting outside of Nevada once the decision is official. It is operating under the assumption of “when” not “if” sports betting becomes legal.

“I think there should be great emphasis on what might happen at the Supreme Court,” Jim Murren, MGM Resorts International CEO said on last week’s Q1 earnings call. “Our legal experts seem very confident that PASPA will be overturned.”

MGM already offers sports books at its Nevada properties where sports betting is legal. It also operates playMGM, an online sports betting app which could give it a distinct advantage.

With properties in six additional states, including New Jersey, MGM is ready to implement sports betting quickly. Its properties outside of Nevada include:

Of the states where MGM currently operates, Mississippi and New Jersey have legislation that would allow for legal sports betting if the decision is favorable. Additionally, Michigan, Maryland, and Illinois recently introduced legislation.

All in all, there are 20 states in the U.S. that are in varying stages of the legislative process regarding sports betting.

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Timing for legalized sports betting couldn’t be better

“We intend to be the biggest beneficiary of commercial sports betting if the Supreme Court should overturn PASPA as early as June,” Murren said.

MGM’s stock fell after reporting a one-percent drop in revenue in Q1 at its U.S. properties. During the earnings call, Murren expressed a bright future for the company thanks to sports betting.

Besides the potential for sports betting at its other properties, MGM has invested in sports teams and arenas in the Las Vegas area – making sports a pivotal driver to MGM’s immediate success.

It’s not just MGM that is banking on sports betting. As mentioned earlier, Penn National and CDI are also keeping sports betting front of mind.

It’s fair to say that every casino in the U.S. is hoping for the decision to come down in favor of New Jersey’s position. The enthusiasm around sports betting has everyone parked in front of the Supreme Court’s blog on opinion days.

The sports betting decision isn’t the only thing casinos are keeping an eye on

Casinos are joining forces in opposition to an integrity fee proposed by the sports leagues. It is seen as a way to profit from what is sure to be a significant revenue boost if sports betting becomes legal.

Sports wagering has been happening in Nevada since 1949 without such a fee. Instead, sports books are responsible for paying a tax on revenue to the state.

The integrity fee would be assessed on all amounts wagered. The fee would be in addition to the tax on revenue owed to the state. The sports leagues are lobbying state legislatures to include a fee in their bills.

It is not to say some sort of fee isn’t warranted. It is just the fees the leagues are requesting will not be sustainable to the sports books as proposed.

Additionally, there is no oversight that the integrity fees are actually used to ensure the integrity of the game. It brings into question what the leagues will do with the integrity fees that they aren’t already doing.

Legalizing sports betting is only the first step in launching a sports book. There are a whole host of details to be ironed out on a state-by-state level including license procedures, tax policies, and other requirements.

Most industry experts believe the Supreme Court will rule in favor of New Jersey. The decision is expected to come before the Court breaks for the summer in July.

That is when the real work begins. It looks like MGM is ready to flip the switch – at least in New Jersey and Mississippi once given the go ahead. It stands to reason, its other properties will quickly follow.

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Kim Yuhl

Kim Yuhl is a freelance writer and blogger who writes about poker culture and the online gambling industry. A part-time member of the poker media since 2013, Kim recently sold her marketing business to write full-time while traveling around the world. You can learn more about her work and travels at kimyuhl.com.

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