MGM Rules the World

MGM Resorts has announced a series of agreements that positions the company as the nationwide leader in the emerging sports betting industry and expands its influence in the iGaming business. A 50-50 venture with GVC will provide a sports-betting platform for the company. The announcement of a partnership with Boyd Gaming will provide online and mobile gaming platforms in states where each company many not operate.Capping the week was an historic announcement of a deal with the National Basketball Association.

The legalization of sports betting in the U.S. was a wake-up call for the gaming industry all over the world. Companies have been scrambling to take advantage of this new development, but none as dramatically as MGM Resorts.

The National Basketball Association is the first U.S. sports league to officially partner with a sportsbook operator under a deal announced by NBA Commissioner Adam Silver with MGM Resorts.

The deal makes MGM Resorts the official gaming partner of the NBA and WNBA. MGM receives the rights to use league highlights, logos and a direct data feed from the NBA. The deal is estimated by league sources to be for three years and at least $25 million, according to a report at ESPN.

Silver said the partnership will give MGM an advantage over its competitors and produce a superior experience for customers.

“Those operators who create the best experience for consumers that have official data, that have the official imprimatur of our league and other leagues as well, are going to be those that win in the hearts and minds of consumers,” Silver said during a news conference to announce the partnership.

Jim Murren, CEO of MGM, also at the news conference, said the deal was “historic.”

“The foremost mission is to maintain and preserve the integrity of the game, the fan experience for the NBA fans, and in fact help catapult further the global presence of the NBA,” Murren said. “As a global entertainment company, I feel MGM has an opportunity to partner with the NBA to do that.”

MGM casinos will be able use league and team logos on odds boards at sports books and NBA logos and league highlights also will appear on an MGM sports betting app.

MGM operates sports betting in Nevada—where online sports betting has long been permitted—and has just opened a sports book at the Borgata Casino in Atlantic City, and last week at its two Mississippi casinos. Murren has said he expects online sports betting at the Borgata to begin in New Jersey in the coming days.

More notable, however, is the drastic change in a sports league’s view of sports betting. The NBA joined the other U.S. professional sports leagues in opposing New Jersey’s challenge to a federal ban on sports betting. The U.S. Supreme Court ruled in favor of the state and overturned the federal ban in May. Since then Delaware, New Jersey and now Mississippi have legalized sports betting and as many as 20 more states are expected to follow.

The league joined the court challenge despite Silver repeatedly saying that legalized sports betting was inevitable and calling for national regulation. The league has also joined with Major League Baseball and the PGA Tour to lobby for an “integrity fee,” based on the amount wagered on their respective games and events to help pay for monitoring the integrity of the sport. So far, no states have adopted such a fee.

The NBA maintains that it also has a right to be compensated for use of its intellectual in the wake of increased sports betting across the country. Many analysts said this new deal could be a beginning precedent for setting such a standard. The deal also allows the NBA to better monitor betting trends at MGM sports books.

Silver did not give specifics on the deal, but did say that unlike the proposed integrity fees, the league’s proceeds were not based on the total amount wagered on NBA games.

“It was very important that we were able to establish through a commercial relationship that indeed we should be compensated for our intellectual property and our official data,” Silver said.

“I think we’re still having our discussions with our states about so-called integrity fees based on betting handles,” Silver continued. “To me, there’s many different ways to skin the cat, so to speak, and we decided here—rather than sort of re-litigating the integrity fee which is still being hotly discussed state by state—let’s find an approach which is unique to us and where we both feel that we’re being fairly treated.”

The move comes after MGM and GVC Holdings announced a $100 million joint venture to create an online gaming experience and also formed a partnership with Boyd Gaming.

The American Gaming Association strongly endorsed the deal.

“Sports betting deals should be done through contracts—not statutory obligations,” Sara Slane, senior vice president of the AGA said in a statement. “Today’s announcement highlights the symbiotic partnership between casino gaming companies and sports entities. We anticipate this is the first of many to come.”

Silver, however, did say that as the first of its kind, both sides will have to watch how the relationship develops.

“It’s a leap of faith on both sides,” Silver said. “It’s a deal moderate in length where I think we can both step back and assess as we go and see, ‘Is it working? Is this deal fair? Are we providing the consumers with the right type of experience?’

The key point of the deal is the data feed. Having fast, reliable information is vital for expanding the U.S., sports betting market to include in-game betting—bets made while games are in progress. Betting in-game is extremely popular in European betting markets, often with more money bet in-game than before the game.

“I know the value of data,” Murren said. “To be able to have the official NBA data for sports bettors around the world is very valuable. I was willing to, and I’ve paid for that.

“Now, we have tremendous data analytics information from the NBA and that will determine who wins and loses in this arena, the sports betting arena, in the United States,” he said. “And I think MGM’s going to win.”

Silver echoed the importance of the data.

“We understood the value of our marks, of official designations,” Silver said. “But I think then in terms of the data we’re providing, we have a sense of the magnitude of the current business and a sense of where things may go over the next few years. And I’d say we generally tried to approximate in a sense to come up with what we thought was fair compensation.”

According to the Associated Press, MGM will be an official casino partner for the league but will not have exclusive rights to the data. The NBA can still make deals with other casinos offering sports betting. The deal also allows for cross-promotion as MGM will be advertised on NBA assets and social media platforms and the NBA will be promoted on MGM’s betting platforms and mobile apps.

About 1.5 billion was bet on basketball at Nevada sportsbooks in 2017 though the Nevada Gaming Control does not separate the NBA and college basketball on its revenue reports. Sportsbook managers say the NBA accounts for 40-50 percent of the amount bet on basketball, ESPN reported.

In another story, Murren also recently appeared on “The Dan Patrick Show” and said he expects an NBA team to relocate to Las Vegas, but said such discussions were not part of the deal.

“I would think it would be highly plausible that an NBA team would like to relocate to what’s becoming one of the sports capitals of the U.S.,” Murren said. “But this was not a precondition of doing the agreement. I have no illusions that it is.”

Meanwhile, MGM Resorts International made two other major partnership announcements last week regarding the legal sports-betting market. After announcing an unprecedented partnership with locals and regional casino giant Boyd Gaming to share market access and customer databases in offering online and mobile gaming platforms, MGM announced a 50-50 joint venture with U.K.-based GVC Holdings to develop and provide an online and sports-betting platform to the U.S. casino industry.

Under the first agreement, MGM Resorts and Boyd Gaming will both have the opportunity to offer online and mobile gaming platforms—including sports betting, casino gaming and poker—in jurisdictions where either Boyd Gaming or MGM Resorts operates physical casino resorts and online licenses are available. Under this market access agreement, each company will have a path to expand their online and mobile gaming presence across 15 states.

“We are excited to team yet again with Boyd Gaming on this unprecedented partnership, which allows us to fully engage with the almost 30 million M life Rewards members throughout the country,” said MGM Resorts Chairman and CEO Jim Murren. “We look forward to expanding our entertainment options for guests beyond their visits to our land-based resorts.”

“Our industry is evolving, providing opportunities for growth through new forms of gaming like online and mobile gaming,” said Boyd Gaming President and CEO Keith Smith. “Thanks to our partnership with MGM Resorts, Boyd Gaming will have the opportunity to potentially add an online presence in five additional states, positioning us for significant future growth as our respective companies take a leadership role in our industry’s evolution.”

MGM Resorts and GVC will bring together market-leading assets, distinguished brands, proven and scalable proprietary technology, and extensive industry expertise to capitalize on sports betting and online gaming in the U.S. According to the joint announcement, the formation of the joint venture significantly increases speed to market for both parties in an efficient and prudent manner, lowers execution risk, and creates meaningful early mover advantages. The two companies already operate together in the New Jersey iGaming market.

“We are proud to join forces with GVC, the largest and most dynamic global online betting operator, with existing reputable and trusted operations in the U.S., with MGM Resorts’ expertise and leading position in key markets across the U.S.,” Murren said. “This historic partnership will be positioned to become the instant leader in technology, market access, sports relationships and brands.

“We are excited to benefit from GVC’s proprietary, best-in-class technology, digital customer acquisition expertise, and experience with adapting to new operating environments. GVC is unusually qualified due to their existing operations in the U.S. Together, we are creating a one-of-a-kind platform that we expect will dominate the U.S. sports betting market.”

Kenneth Alexander, chief executive of GVC, said “MGM Resorts is a world-leading entertainment business and the most trusted name in gaming, with the highest quality brands and management, and strong sports connectivity. This combined with GVC’s technology and experience in successfully building online gaming businesses across multiple markets presents a truly exciting opportunity for U.S. players and our respective shareholders. To be able to team up with a partner with such pedigree and knowledge, particularly in the U.S., is a real opportunity for GVC.”

The new venture will have exclusive access to all U.S. land-based and online sports betting, online real-money and free-to-play casino gaming, major tournament and online poker, and other similar future interactive businesses—facilitating entry into multiple digital gaming verticals under the playMGM and PartyPoker headline brands. The venture will also allow for full integration between the MGM Resorts and GVC loyalty programs, enhancing the user experience and value proposition for existing and future customers.

Under the agreement, MGM Resorts and GVC have agreed to capitalize the venture with initial commitments of $100 million per partner. The venture will establish a separate headquarters to be located in a major U.S. technology hub, select a leadership team comprised of best-in-class talent from each company and additional new hires, and form a four-person board of directors with equal representation from MGM Resorts and GVC to oversee the venture’s ongoing operations and growth.

The commencement of the joint venture operations are subject to gaming regulatory approvals. Both parties expect the partnership to be ready for the upcoming NFL football season.

Boyd Gaming is already planning to put the partnership to use in Mississippi and Pennsylvania. Smith, as part of an earnings call with investors last wee, said it will have sports betting available at its IP Casino Resort Spa and Sam’s Town Tunica as soon as Mississippi grants regulatory approval, and will look to bring sports betting to the Valley Forge Casino Resort in King of Prussia, Pennsylvania once it completes its $281 million acquisition in September.

 “We are in an envious position when it comes to this growth opportunity,” Smith said on the call. “Few companies can match our 40-plus years of experience in sports wagering, our significant sports betting infrastructure here in Nevada and our growing geographical footprint across the country.”