Chicago Not MGM Kind of Town, Says CFO Halkyard

Chicago Not MGM Kind of Town, Says CFO Halkyard

MGM Resorts International (NYSEARCA:MGM) is weighing domestic expansion opportunities, but Chicago isn’t part of those plans.

MGM Chicago
MGM Chicago
Scenes from downtown Chicago. MGM is unlikely to pursue a casino license there. (Image: Chicago Tribune)

CFO Jonathan Halkyard said there are complexities associated with bringing an integrated resort to the third-largest US city that make it an area the Bellagio operator isn’t focusing on.

Chicago is just complicated,” said Halkyard in a response to a question from Truist analyst Barry Jonas on MGM’s first-quarter earnings conference call yesterday. “The history there in Chicago, the tax and the notion of integrated resort at scale don’t necessarily marry up. And while I think they’ve had some improvement. We’re not overly keen or focused at this point in time there.”

City officials are hoping a gaming venue is operational there by 2025. Last week, they released the request for proposals (RFP) for the gaming license. Halkyard’s comments on MGM’s Windy City plans, or lack thereof, may come as a surprise to some because the operator participated in a request for information round last year.

Chicago Mayor Lori Lightfoot (D) recently said she hopes participants in the RFP process include companies with “Las Vegas addresses.” Halkyard’s comments may partially dent the mayor’s wishes because MGM is the largest operator on the Las Vegas Strip and the biggest private employer in Nevada.

Eyeing Other Opportunities

Due to the central location of Illinois and Chicago’s 2.7 million residents, the city should be a highly attractive opportunity for operators. However, onerous tax policy — including an effective rate of 72 percent — is seen as keeping some operators out of the RFP process.

In 2019, gaming companies such as Las Vegas Sands and Penn National Gaming indicated they could sit out the Chicago bidding. As for MGM, the company is staying abreast of the legislative climate in other large states in which it currently doesn’t have land-based casinos.

“Texas is of course of interest, presumably you know it, didn’t get through the legislative session,” said Halkyard on the earnings call. “So at the very least the discussion is two years away, but as it was defined there, the four big cities, one of them would be something potentially down the road we’re interested in. Florida is complicated as you know, and we are watching that closely.”

The MGM finance boss added that Georgia “is probably not any immediate horizon.” Mobile sports betting and gaming expansion legislation recently failed at the Georgia General Assembly.

BetMGM Again in Spotlight

While MGM and Entain Plc (OTC:GMVHY) held an investor day last week on the fast-growing BetMGM business, the Excalibur operator shared more details, including expectations that the business will contribute more than $1 billion in revenue from operations next year and long-term earnings before interest, taxes, depreciation and amortization (EBITDA) margins of 30 percent to 35 percent.

The iGaming and sports betting unit is also benefiting from its ties to MGM and the M life rewards program.

“MGM also benefited from this relationship not only our new customers being introduced to M life, but through BetMGM, we’re also reigniting relationships with customers that had gone dormant,” said CEO Bill Hornbuckle. “In the first quarter, 10 percent of BetMGM’s new players came from MGM and 44 percent of the new M Life sign-ups have come BetMGM.”

The post Chicago Not MGM Kind of Town, Says CFO Halkyard appeared first on Casino.org.

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