MGM Resorts announced its third-quarter financial report, declaring its withdrawal from the bidding for a casino license in southern New York State and recording a non-cash goodwill impairment of $256 million. Despite challenges in the Las Vegas business due to a decrease in tourists, tightened consumer spending, and a decline in table game returns, resulting in a year-over-year revenue decline, the company is shifting its strategic focus to investing $8.9 billion in an integrated resort project in Osaka, Japan, expected to open in 2030. CEO Hornbuckle emphasized prudent capital allocation, believing that exiting New York was due to insufficient returns caused by a shortened license period, while the Japan project aligns more with long-term interests. The financial report showed earnings per share of $0.24, below expectations, with the stock price falling 8% after hours.
Strategic Adjustments and Performance
MGM Resorts' third-quarter revenue was $4.3 billion, slightly above expectations, but earnings per share of $0.24 were significantly lower than the same period last year ($0.54). Revenue from the Las Vegas Strip was $2 billion, below the $2.1 billion from the same period last year, mainly due to renovations at MGM Grand Hotel, decreased dining revenue, lower table game win rates, and a decline in the RevPAR indicator. Adjusted EBITDAR fell to $601 million (compared to $731 million in the same period in 2024). The company noted ongoing issues affecting performance, including a decrease in international tourists, the bankruptcy of Spirit Airlines, and traffic congestion, with the stock price falling 8% after hours and a cumulative decline of over 10% for the year.
New York Project Exit and Financial Impact
MGM unexpectedly withdrew from the New York casino license bidding, with the CEO explaining that new state guidelines reducing the license period from 30 years to 15 years led to insufficient expected returns. This move triggered a $256 million non-cash goodwill impairment and a $93 million impairment of related assets at Empire City. Hornbuckle stated that despite a preliminary agreement with Yonkers City that could bring in $400 million in taxes, funds would be better allocated elsewhere. Compared to competitor Resorts World setting slot machine taxes at 56% and table games at 30%, MGM considered the policy uncertainty in New York too high.
Japan Project and Future Outlook
MGM is shifting its strategic focus to the integrated resort in Osaka, Japan, with an investment of $8.9 billion, expected to open in 2030, and has signed a $300 million credit agreement (with a 2.5% interest rate, expandable to $450 million). The company believes the Asia-Pacific market has more growth potential, with the current cost structure being historically optimal. Although analysts have lowered target stock prices (Truist to $47, Macquarie to $45), they remain optimistic about its digital business, regional diversification, and support from its China layout, believing that a recovery in Las Vegas could lead to significant upside.
