Posted on: May 5, 2022, 12:24h.
Last updated on: May 5, 2022, 02:06h.
The Nevada Gaming Control Board (NGCB) has approved MGM Resorts International’s (NYSE:MGM) acquisition of the operating rights of the Cosmopolitan Las Vegas. That paves the way for that deal to close next month.
MGM announced last September it’s paying $1.6 billion to private equity giant Blackstone (NYSE:BX) for Cosmopolitan’s operating rights. A real estate consortium consisting of the Cherng Family Trust, Stonepeak Partners, and Blackstone Real Estate Income Trust (BREIT) is paying approximately $4 billion for the property assets.
The Cosmopolitan is an iconic brand with a loyal and complementary customer base that will further enhance our Las Vegas Strip portfolio,” said MGM CEO Bill Hornbuckle on the company’s first-quarter earnings conference call earlier this week. “We’ve met with key leaders at the Cosmopolitan over the last weeks and months, and are impressed by the quality of their team.”
Hornbuckle added that the company is on course to finalize the sale of Mirage’s operating rights to Hard Rock International in the second half of this year.
Pragmatic Approach to Cosmo Integration
While the purchase of the operating rights is slated to close next month, that doesn’t mean Cosmopolitan will immediately be fully integrated into MGM.
That process will take more time, and that gentle approach is warranted because Cosmopolitan is a cash cow. The venue generated $450 million of cash flow over the trailing 12 months, indicating there’s no motivation for MGM to upset the natural order of things at the venue. There’s also every reason to take a pragmatic approach to integrate the property into the MGM portfolio.
No time frame was given as to when Cosmopolitan will be integrated into the MGM Rewards program.
BetMGM Taking Over Cosmopolitan Sportsbook
Not surprisingly, MGM’s BetMGM will run the sportsbook at Cosmopolitan, meaning William Hill is getting the boot. Relative to other Strip venues, Cosmopolitan isn’t known as a hub for sports wagering. But that could change with BetMGM running the show.
BetMGM is currently available in 21 markets, and in those jurisdictions, it’s the dominant iGaming operator. It consistently ranks in the top three among online sportsbook operators. The unit is a 50/50 partnership with Entain Plc (OTC:GMVHY).
On Monday, MGM said it offered $607 million in cash to acquire Sweden’s LeoVegas in a bid to boost its iGaming footprint outside the US.
BetMGM is delivering a financial update on May 12, and it’s possible the operator could make comments about its new venue at Cosmopolitan during that event.