Inside Gaming: MGM Resorts Up, New Pacts for Calif. Tribes, Wynn Boston Harbor Building Begins
This week's installment of Inside Gaming shares positive second-quarter numbers reported by MGM Resorts International, tells of agreements upon new casino pacts between California and several tribes, reports on the start of construction of the new Wynn casino resort in Massachusetts, and points you to news regarding the closure of the Trump Taj Mahal.
Crystals Sale Makes for Strong 2Q Report for MGM Resorts International
This week MGM Resorts International reported its second-quarter earnings for the year, and the news was good for the company with profit exceeding observers' estimations.
The Associated Press says the "Las Vegas company reported net income of $474.4 million, or 83 cents per share" for April-June 2016, a huge jump over the "$42.9 million, or 17 cents per share, in the same quarter a year ago."
The results were well above what Wall Street had predicted, with three analysts from Zacks Investment Research having made an average estimate of just 21 cents per share prior to the report.
The bottom line changed markedly thanks to the MGM's sale of its share of The Shops at Crystals, netting a $406 million gain. Meanwhile revenue actually fell about 5 percent to $2.27 billion, with casino revenue dipping 9 percent during the quarter, summarizes the AP.
As MGM Resorts International notes in its press release, the quarter was also highlighted by the company having closed its acquisition of Boyd Gaming Corporation's interest in the Borgata Hotel Casino & Spa, as we reported in June.
MGM Resorts was predictably optimistic regarding the report and future prospects.
"I am incredibly proud of the concerted effort of our talented executive teams and employees that produced our most profitable quarter in eight years at our domestic resorts," stated Jim Murren, MGM's Chairman and CEO.
Worth noting as well from the report, MGM China's net revenues were down 19%, operating income scaled back 11%, and adjusted earnings before interest, taxes, depreciation and amortization down 9%, again reflecting how the company's Las Vegas operations are outpacing those in Macau. Not unrelatedly, MGM Resorts has also announced the opening of its new MGM Cotai property has been postponed (again) to the 2Q of 2017.
California Agrees to New Tribal Casino Pacts
Yesterday it was announced that Governor Jerry Brown of California had made new agreements with several tribes regarding the operating of casinos in the state. According to The Sacramento Bee, the "announcement brings to 10 the number of tribal casino agreements negotiated by Gov. Jerry Brown's office that await legislative ratification as lawmakers hurry to finish their work for the year."
The agreements include one with the Yocha Dehe Wintun Nation who own and operate the Cache Creek Casino Resort in Brooks, California just north of San Francisco and Oakland. That agreement requires the Yocha Dehe tribe to pay the state more than $33 million per year, although the majority of that money would be earmarked for Yolo County and a statewide trust fund to help tribes with either small casinos or no casinos.
Agreements were also made with the Agua Caliente Band of Cahuilla Indians in the Coachella Valley, the Pechanga Band of Luiseño Indians close to Temecula, and the Jamul Indian Village. An amendment was made as well to an already-established compact with the Yurok Tribe.
The compact with the Agua Caliente Band would permit the tribe to operate up to six casinos in the state, while the agreement with the Pechangas will also see the tribe contributing to the new statewide trust fund. The pacts all follow guidelines established by a 2010 court decision that imposed limits on what the state could collect from tribal casinos.
Construction Finally Begins on Wynn Boston Harbor
After much controversy and sometimes heated back-and-forthing between Wynn Resorts and multiple Massachusetts cities, construction has finally officially begun on the new Wynn Boston Harbor resort and casino, formerly known as the Wynn Everett.
As Boston.com reports, the first wave of what should be around 4,000 construction workers descended onto the site located along the Mystic River yesterday to begin building what is now estimated to be a $2.1 billion property. The opening date is now being set at June 2019.
"There's no stopping us now," said Bob DeSalvio, Senior VP of Wynn Resorts Development. "Onward and upward to the opening of Wynn Boston Harbor."
The city of Boston and its mayor Marty Walsh had exerted considerable effort last year to stop the project, including filing lawsuits on two different occasions. Earlier this year, however, the two parties were at last able to come to an agreement and set aside their conflict.
The mayor of nearby Somerville Joseph Curtatone also provided an obstacle to Wynn Resorts moving forward with the construction, filing a challenge through the state's Department of Environmental Protection earlier this year that caused a further delay. However the DEP decided to grant Wynn a waterfront construction permit, and when Curtatone made it clear earlier this week that Somerville wouldn't be challenging that decision, construction was finally able to begin.
That said, the Somerville objection could still come into play, as might other objections currently being considered in separate lawsuits. "Any pending litigation will be handled through the court system," said DeSalvio, "but we are absolutely, positively moving forward."
Find out more about the project and other issues Wynn Resorts will need to settle during the nearly three-year construction of Wynn Boston Harbor by visiting Boston.com.
ICYMI: Trump Taj Mahal Announces Intention to Close
In case you missed it, there was big news this week on the Atlantic City boardwalk with the announcement that Trump Taj Mahal will be closing its doors in early September. The closure would mark the end of more than two years of uncertainty regarding the casino's fate, the culmination of a lengthy downward turn of its fortunes.
Read all about the impeding closure and three decade-plus history of the embattled Trump Taj Mahal in our report from yesterday, "Trump Taj Mahal to Shut Down After Labor Day Weekend."
Photo: MGM Resorts International