Coronavirus Situation May Spur MGM To New Experiments In Casino Activities

Article by : Eva Reed Aug 14, 2020

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Updated: Apr 6, 2023

It is out in the open that things have not been going well for MGM Resorts lately. This concerns the decline in income recorded in the second quarter of 2020. Nevertheless, because of the decision taken to reduce operating costs drastically, the overall margin improved significantly. Meanwhile, the reduction of the expenses mainly affected the reduction in employee salaries.

According to three-month data, which was released on Thursday as of June 30, the company’s revenue fell to $289.8 million. This means that on a comparable basis last year, total revenue fell 91%.

What’s more, one of the US’s largest casino operators also posted a whopping $492 loss, up from $764.3 million in the previous year. Notably, the company’s net loss was $857 million, compared to a net profit of $43.4 million in the second quarter of 2019.

As a reminder, the brand managed to restore its business in Las Vegas only on June 4 after a long period of closed doors. This situation was directly related to the increase in the number of cases of coronavirus.

One way or another, the company said its total revenue was down 90% year over year. If we imagine this indicator in monetary terms, it concerns a decrease in revenue to $151 million. Suppose we analyze the same index for regional operations in the United States. In that case, it involves a reduction of income by 90%, which corresponds to $89 million.

A ray of light in the realm of darkness became the margin indicators for the largest gaming operator in the United States. After the casino was able to re-launch its operations in Vegas, the margin showed an increase of 450 basis points compared with last year. It is noteworthy that about 100 points were made possible thanks to the favorable table hold fixed in June. Equally, important news was that the margin of regional offices also showed a rapid growth by 880 points.

If you pay attention to the company’s division, which is located in Macau, MGM China recorded a drop of 95%, which corresponds to $33 million. These figures were the result of border closures and the inability of mainland Chinese to visit Macau. The financial situation in Macau for MGM is not as successful as in the United States. The operator was unable to repeat its success by reducing costs through staff salaries. Such a step could be very negatively assessed by the local government. Moreover, this could complicate the process of future license renewal for MGM.

The First 14 Are On The Way

More recently, MGM CEO Hornbuckle announced that the first 14 of 18 facilities in the US are ready to go live starting August 7. The favorable situation with the opening of the casino and the restart of the business did not affect all facilities. For example, casinos located in Las Vegas, namely Mirage and Park MGM, may remain closed until the end of the year.

The decision to open them can be made only against the background of an improvement in the situation with Covid-19 in Nevada. Anyway, the re-opening of these casinos is directly associated with additional costs. That is why the management is in no hurry to launch absolutely all facilities, sensibly assessing the situation.

MGM Resorts International is currently one of the largest owners of integrated casinos, hotels, and entertainment resorts in the United States and Macau. The company’s target audience consists of premium clients, wealthy vacationers, and group clients who organize conferences in hotel-type premises owned by MGM.