IAC Makes $1B Investment in Casino Giant MGM Resorts

Bellagio Resort & Casino. Image via Pixabay

Media-centric holding company IAC/InterActiveCorp has completed an aggregate investment of about $1 billion in MGM Resorts International. IAC’s stake in MGM Resorts was accumulated over a period of several months and totals about 12 percent.

IAC Chairman and Senior Executive Barry Diller explained in prepared remarks that the attraction of MGM—beyond its market presence in leisure, hospitality and gaming—is the potential of online gaming, which is generating a nearly insignificant portion of MGM’s current revenue. That part of the business has enormous growth possibilities and is a close fit with IAC’s steady focus on interactive businesses, Diller noted.

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In a letter to IAC shareholders, Diller and CEO Joey Levin called MGM “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”. And while the COVID-19 outbreak has hit MGM hard, the company is well-positioned to ride the pandemic wave until there’s a vaccine. At that point, Diller and Levin noted, MGM will still have more than a third of the guest rooms on the Las Vegas Strip, along with eight regional properties across the U.S., two in Macau, and possibly a presence in Japan.

Asset-light strategy

Even before the pandemic upended Las Vegas, MGM was facing serious changes, as it executed some big transactions in pursuit of its asset-light strategy.

Last October, the company announced deals to offload its Bellagio and Circus Circus properties. A 95 percent interest in the Bellagio was subsequently sold to Blackstone REIT for $4.3 billion under a leaseback agreement.

The Circus Circus Las Vegas hotel and casino, along with a 37-acre festival site, was sold for $825 million to an affiliate of casino billionaire Phil Ruffin in December. 

Then this January, MGM entered into a $4.6 billion sale-leaseback with Blackstone’s REIT for the MGM Grand and Mandalay Bay.