MGM Resorts (MGM) Partners AAF to Push Up Sports Betting
MGM Resorts International MGM has entered into an agreement with new professional football league — The Alliance of American Football (“AAF”). Per the deal, the company will not only invest in AAF but will also be the exclusive in-game gambling partner of the same for three years. Notably, AAF will have a mobile app that will allow its user to watch gambling online and bet at the same time. The app will be operated by MGM GVC Interactive.
MGM Resorts also announced a multi-year partnership with National Basketball Association, under which the former becomes the official partner of NBA and WNBA. Under the partnership, MGM Resorts will use official NBA and WNBA data and branding, on a non-exclusive basis, across MGM Resorts' land-based and digital sports betting offerings throughout the United States.
MGM Resorts has partnered Boyd Gaming as well. This deal will significantly enhance each company's market access and customer base throughout the United States. Under the partnership, both the companies have initiated opportunities to offer online and mobile gaming platforms, including sports betting, casino gaming and poker.
In an effort to strengthen its foothold in the gaming industry, MGM Resorts seems to be banking on sports betting at various locations, following the legalization outside Nevada. In May 2018, the Supreme Court overturned the Professional and Amateur Sports Protection Act (“PASPA”) that banned sports betting outside Nevada. The court supported the legality of a 2014 New Jersey law, which allows sports betting at casinos as well as racetracks in the state. The decision also broke the Nevada's monopoly on the betting market.
Furthermore, the Court ruling opened door for other states to enter sports betting business. Per Eilers & Krejcik Gaming 2017 reports, legal sports betting market is likely to garner $6.03 billion in revenues annually by 2023. In fact, in a bid to legalize sports betting, nearly 20 states have introduced bills and many other states have started working on this matter.
We believe that the scope for the casino operators has intensified following the legalization of sports betting outside Nevada as the illegal betting in the United States is valued at billions of dollars annually. Per MGM Resorts, legalization of sports betting will result in “hundreds of millions of dollars in profit to the company.”
Price Performance
Shares of MGM Resorts have declined 26.8% in the past six months compared with the industry’s decrease of 19.9%. Stocks such as Boyd Gaming Corporation BYD, Red Rock Resorts, Inc. RRR and Century Casinos, Inc. CNTY, which belong to the same industry, also declined 3.4%, 10.3% and 7.6%, respectively, in the same time period.
MGM Resorts has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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MGM Resorts International (MGM) : Free Stock Analysis Report
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