MGM has been experiencing widespread rumors with regards to purchasing Wynn resorts. They were finally able to stop the chatter on that front, but it seems a new situation is arising.
MGM Resorts announced that with MGM Growth Properties, their real estate investment trust, they are moving into New York City. The two companies have purchased Empire City Casino and Racetrack. The price tag– $850 million. The casino conglomerate has made a gambling move with Empire . The casino will be sold to MGM Growth Properties, who will lease the company to MGM Resorts. Jim Murren, the CEO and Chairman for MGM Resorts International stated they are gaining a presence on the East Coast and wish to keep their expansion going. The New York property was one way to get into a high-density region.
Murren also stated they believe the purchase will help free some cash flow and present an attractive future for the company brand. MGM will put up $260 million through stock shares. Empire City has the approval to incorporate live table gaming with a license. The license will last until 2022. MGM will also pay $50 million to extend the license until 2024, assuming approval can be granted.
Empire City is 15 miles from Times Square in Manhattan. The casino has 5,200 slot machines and several electronic table games. In 2017, the casino reported an income of $230 million net revenue. Empire also has restaurants and live, plus simulcast horserace betting.
MGM has wanted to break into the Big Apple for years but was unable to win a bid for a commercial casino license five years ago. New York may also be looking to change sports betting now that the Federal government cannot ban any state from having sports wagering. Empire City may be able to gain approval for sports betting if the laws of the state change.
Wagering on MGM Stock
Financial analysts warn investors to avoid MGM Resorts stock in June . With the new purchase, it is likely that the company will experience a reduced value in their stock prices. It may seem like a good gamble to invest when the stocks are down, but perhaps they are not going to return to a decent rate for investors to gain their money back. Analysts are finding the company is not going to have a good year the way they are spending money and the moving average for the last 200 days has not been favorable.