On the recent MGM Resorts Q2 2024 earnings call, MGM reported a record-breaking second quarter with $4.3 billion of consolidated net revenue generated.
Most of the growth MGM Resorts enjoyed in the second quarter of 2024 was attributed to MGM China’s success and better room occupancy and revenue in Las Vegas. That being said, MGM’s regional business, which includes BetMGM Virginia, has remained flat.
MGM does not have a massive footprint in Virginia. Its BetMGM Sportsbook is one of the operators currently taking bets in the Virginia sports betting market, but it has no retail casino in the state and iGaming is still illegal.
Unless Virginia online casinos are legalized, there are not many pathways to growth in Virginia for MGM.
To gain market share, MGM needs states like Virginia to legalize iGaming
MGM reported no meaningful growth in its regional operations, which includes all United States businesses other than the Las Vegas Strip.
In Q2 2024, MGM generated $927 million from its regional operations which was nearly identical to the second quarter of 2023. Last quarter, MGM reported a 4% dip in regional business.
MGM does much of its regional business through BetMGM Sportsbook, which is performing well but is far from a leader in the sports betting industry. In most states, BetMGM Sportsbook takes around 5%- 8% of statewide wagers. That is a small percentage compared to industry leaders FanDuel and DraftKings, which take in over 30%.
MGM is heavily investing in iGaming to close that gap. In Virginia, online casino legalization has not gained ground, but that has not stopped MGM from preparing. MGM Resorts International President and Chief Executive Officer Bill Hornbuckle noted this in his prepared remarks on the Q2 2024 earnings call.
“We made significant progress with our international digital strategy by adding both an in-house sports product and live dealer capabilities to our online gaming offerings. We’re excited by the progress we’re making as a company against our strategic proprieties and anticipate carrying our current momentum forward into the back half of the year.”
For the rest of the year, MGM plans to continue repurchasing shares of stock
As MGM looks forward, it is particularly focused on repurchasing shares of stock to return capital to shareholders and is investing its profits to do so.
Chief Financial Officer and Treasurer of MGM Resorts International Jonathan Halkyard outlined just how successful MGM has been returning capital to shareholders.
“We continued to deliver on our Free Cash Flow growth algorithm in the second quarter, driving strong financial returns thanks to a solid baseline of cash flow from our domestic resorts, the continued growth of our digital business and the resumption of dividends from MGM China. We remain committed to returning capital to our shareholders. In the second quarter, we returned more than $400 million through share repurchases, reducing overall shares by nearly 40% since the beginning of 2021.”
At the end of 2020, MGM had nearly 500 million shareholder shares. That is now down to 305 million outstanding shares after MGM spent $924 million repurchasing them.
MGM Resorts still has $1.3 billion of funds left to continue buying back shares so expect this trend to continue for at least the rest of 2024.
