Borgata now has just one owner: MGM.
What happened with Borgata?
MGM Resorts announced this week that it had acquired Boyd Gaming’s 50% share of the Atlantic City hotel and casino for consideration of $900 million.
MGM is paying $600 million directly to Boyd, with the rest of the consideration coming in the form of assuming Borgata’s outstanding debt. The deal actually has MGM Resorts selling Borgata to MGM Growth Properties, but the end result is the same: MGM’s full ownership of the crown jewel of AC.
Last year Borgata generated $812 million in net revenues.
Jim Murren, Chairman and CEO of MGM Resorts, had this to say in a press release:
“Borgata is the premier resort in Atlantic City and a great addition to our growing presence in the Northeast,” said”While the market continues to experience challenges, Borgata has outperformed and differentiated itself as the undisputed leader in the city. Our decade-long partnership with Boyd Gaming has been a great one, and Borgata’s talented employee base will complement and strengthen our more than 60,000-member worldwide MGM Resorts team. We are excited about the opportunity to bring our market-leading loyalty program, M life Rewards, to the resort and integrate our operations, to position Borgata for further growth.”
What are the other takeaways and impacts on MGM’s takeover?
MGM’s tentacles everywhere
Even though MGM was already in NJ via its part-ownership in Borgata, it gives MGM a full stake in the future of the New Jersey casino industry.
MGM Grand Atlantic City of course, was planned about a decade ago before the plan was scuttled because of economic conditions. Back in 2010, MGM had been shopping its share of the Borgata.
All-in on New Jersey?
MGM fully planting its flag in NJ and AC comes during turbulent times for the city. That includes:
- The recent problems regarding insolvency of the city government, which is being bailed out by the state.
- Claims by some current casino interests that properties could have to close their doors if casinos are allowed in North Jersey.
The move would seem to make it clear that MGM is bullish on the future of the Borgata in specific and its place in the NJ market in general. There’s also a chance the sale will pave the way for MGM to be a licensee in North Jersey.
Upping its East Coast presence
MGM appears intent on widening and solidifying its presence east of the Mississippi River. Per the Press of Atlantic City:
The company “is becoming a major force in the East Coast, from its National Harbor project in Maryland to its project in Massachusetts,” said Michael Pollock, managing director of the casino-research firm Spectrum Gaming Group. He called the proposed sale “a clear advancement of the classical hub-and-spoke business model, which is becoming very dominant in gaming.”
The online gambling and poker angle
Borgata was already the market leader for NJ online gambling, and MGM now assumes the No. 1 position as the parent company.
It also adds to the possibility of a shakeup on the online poker side of things, as Borgata and PartyPoker share liquidity for iPoker. Before the MGM takeover, there was already a question if that partnership would remain, and if PartyPoker would remain viable for licensure in the state after it was taken over by GVC.
MGM’s new position in New Jersey. could also change the calculus on whether NJ would enter into an interstate agreement for online poker with New Jersey and Delaware. That seemed unlikely before the MGM move. (Nevada does not currently have online gambling beyond poker, but it is considering a change to that policy.)
No matter what happens, what MGM does regarding online gambling moving forward is worth watching.
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