While Penn National reported strong Q3 earnings, MGM Resorts International did not have the same luck on Thursday. MGM reported revenue of $1.13 billion for Q3 that ended September of 2020. This missed the Zacks Consensus Estimate by 7.61%. It has been a troublesome year for the massive gambling conglomerate. MGM shares have dropped 39.6% since January while the S&P 500 has gained 1.3%.
The COVID-19 pandemic has given businesses across the country headaches, with the gambling industry among those hit especially hard. They have been dealt a difficult hand in keeping the lights on and doors open, contending with limited capacities, and maintaining social distancing guidelines. Their results compared to last year reflected these challenges.
MGM Resorts International Q3 Earnings
Q3 Revenues:
2020: $1.1 billion (66% loss)
2019: $3.3 billion
Q3 Per Share (Losses)
2020: $1.08
2019: $.08
Q3 Net Incomes
2020: -$495 million
2019: $238 million
MGM’s poor Q3 results are a direct result of the COVID-19 pandemic, but Zacks Consensus Estimates take this into account. MGM’s financial woes didn’t start with the pandemic, however. According to Zacks, MGM Resorts has not beaten a consensus revenue estimate in four quarters. They have however beaten consensus estimates for EPS (Earnings Per Share) two times in the last four quarters.
In Q2, MGM posted a $1.52 loss per share whereas Zacks estimated a $1.65 loss per share. A sizeable loss for MGM Resorts, but an earnings beat is an earnings beat. Finally, in Q3, MGM posted a $1.08 loss per share, which is slightly up from the forecasted $1.10 loss.
Industry Changes Force Gambling Companies To Evolve
MGM Resorts International is not the only company in the gaming industry facing difficulties. Caesars Entertainment Inc. announced Tuesday that it has reached an agreement with Twin River Worldwide Holdings, landing Twin River the rights to Tropicana Evansville (Indiana). The deal is worth $480 million and allows Twin River to operate and/or sell Tropicana Evansville in its entirety.
This is not the first time Caesars Entertainment has worked with Twin River either. Earlier this month, Caesars Entertainment sold Bally’s Atlantic City and its naming rights in perpetuity to Twin River. At the time, we posited how gambling’s future would lie within the constructs of virtual gaming.
Since then, we have seen Caesars sell off another major property, all while financing a $3.7 billion buyout of William Hill, with the goal of mobilizing its platform by diving into the mobile sports betting market and beefing up its online casino presence.
Caesars Entertainment Inc. has clearly pushed for these changes in recent weeks. Their results for Q3 are not yet known but we have seen mixed results from gambling companies. On Thursday, Penn National Gaming reported strong Q3 results beating consensus EPS by 90%.
Caesars has an earnings call scheduled for Nov. 5 to release their results.
Tropicana Opens The Door For A William Hill Launch In Indiana
On Friday, William Hill launched its mobile sports betting product in Indiana. Prior to this, you could find the online sportsbook app in Illinois, Colorado, Iowa, Nevada, and New Jersey. The addition of Indiana earlier today marks the seventh state that William Hill is licensed to operate in.
William Hill’s land casino partner is the Tropicana Casino, such a partnership is mandatory in the state of Indiana in order to offer sports betting. William Hill will become the main focus of Caesars Entertainment with this sizable purchase.
Tropicana Casino being sold to Twin River Holdings was clearly a calculated decision. By granting William Hill a license they will now be able to extract maximum value from their other Indiana casinos’ licenses.
Caesars continues to have a huge impact in Indiana since a merger with Eldorado Resorts. The deal was agreed upon in June of 2019 and impacted five Indiana casinos owned by Caesars. Hoosier Park Casino, Indiana Grand Racing & Casino, Horseshoe Hammond, Horseshoe Southern Indiana Hotel & Casino, and Tropicana Evansville were all involved in the Eldorado/Caesars merger.
Caesars’ great restructuring of 2020 continues apace, and it will be interesting to see if Caesars moves on from those four casino locations as well.
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