The gambling industry has been devastated by restrictions implemented by the government to stop the spread of the COVID-19 pandemic. But there’s a light at the end of the tunnel. MGM Resorts International received a $1 billion boost with an investment from IAC (InterActive Corp).
IAC bought a 12% stake in the casino operator, soaring its shares to 14%. Barry Diller, the Senior Executive of IAC, stated his initial interest was in MGM’s online gambling business.
News Highlights
- IAC invests $1 billion in MGM, acquiring a 12% stake
- Barry Diller showed interest in MGM’s online gambling business
- The online gambling industry in the US would benefit from this investment
IAC Goes All In MGM Resorts
A week ago, IAC’s Barry Diller issued a statement saying the company has bought a 12% stake in the giant casino operator MGM Resorts International. The $1 billion investment increased the casino’s shares to 14%. Diller is also the Senior Executive of Expedia Group, the Fox Broadcasting Company, and USA Broadcasting
Considering that MGM reported a 91% drop in revenue due to COVID-19, and the government’s restrictions to stop its spread, the investment came when the casino needed it the most.
The current pandemic brought revenue (though not expenses) to a temporary halt. MGM had to repurpose cash that it had wisely stockpiled for share repurchases to defend its solvency instead. The good news is, we believe MGM has enough resources and access to capital to come through competitively stronger.Barry Diller
With the boost by IAC, the company will make it through. It is especially so since IAC may not have direct control over what MGM does and plans to do in its online space. As the company’s CEO, Joey Levin said, IAC will be a long-term strategic partner and would welcome the opportunity to contribute in any way they can to MGM’s success.
A Special Focus on Online Gaming
The billionaire mogul, said that what initially attracted him was MGM’s online gambling business.
MGM presented a “once in a decade” opportunity for IAC to own a meaningful piece of a preeminent brand in a large category with great potential to move online.Barry Diller
He added that he has been following the online casino industry for a while, looking for a good opportunity to invest in and enter a global industry worth over $450 billion. He saw that opportunity with MGM. When asked about his opinion about the investment, Diller said:
We are energized and excited to make this investment in MGM, and we’re particularly interested in an area that currently comprises a tiny portion of its revenue — online gaming.Barry Diller
What Does This Mean for the Online Gambling Industry?
In a statement, IAC described MGM as an “aspirational brand.” Given the casino’s success so far, that’s not far from the truth. When asked about how they could contribute to the casino’s growth, both Levin and Diller said they would do what they could to help MGM’s sports betting and digital gaming businesses grow.
Since IAC wants the piece of the pie, and considering its successful moves with all the company purchases and sells it made over the years, it would mean that it is serious about helping MGM expand and reach new heights.
IAC’s Expansion to Online Casinos
Considering that MGM operates in Las Vegas and New Jersey, but not in Pennsylvania, IAC plans to expand into the online space.
With the Michigan online casino launch, it would be the best opportunity to be among the first who deliver casino games like real money online slots, to enthusiastic players, thanks to its MGM Grand Detroit.
With many states passing online gambling bills, and the aid of IAC, MGM will likely ascend to the next level.
