Casino Leasebacks Could Become the Next Big Thing in Las Vegas

  • MGM Resorts sold and is leasing back the Bellagio Hotel & Casino.
  • More Las Vegas casino leasebacks could be on the horizon.
  • Eldorado Resorts is interested in selling property, too.

Not long ago, MGM Resorts sold The Bellagio to the Blackstone Group. Under the terms of this sale, the hotel-casino will be leased back to MGM Resorts, which will continue to operate the venue. Many analysts now believe that casino leasebacks could become the next big thing in Las Vegas.

Bellagio Las Vegas Hotel Casino

This move allows MGM Resorts to begin investing more money into property overseas. More companies likely recognize this and will choose to do the same. Let’s look at what this means for the future of Las Vegas.

MGM Resorts’ Sale of the Bellagio, Explained

MGM Resorts International is one of the biggest and most profitable casino companies in the world. It owns and operates many hotel-casinos in Las Vegas including the Mirage, MGM Grand, and Mandalay Bay. Recently, company officials revealed plans to sell some of the biggest venues in Las Vegas.

Eventually, news broke that MGM sold Circus Circus Hotel & Casino. The venue was purchased by Phil Ruffin, who owns several major properties in Las Vegas already. Reports indicate that Circus Circus was purchased for $825 million.

Immediately after selling Circus Circus, MGM Resorts announced that it sold the Bellagio Hotel & Casino, as well. The Bellagio is considered one of the most prestigious venues on the Strip. The Blackstone Group bought this property for an astounding $4.2 billion.

Not long after the sale was announced, details emerged that showed it would be leased back to MGM Resorts for $245 million a year. MGM Resorts will continue to operate the hotel-casino, as well.

These casino leasebacks could start becoming more common. Analysts predict more could be on the way.

Analysts Predict More Las Vegas Casino Leasebacks in the Future

Property values are continuing to rise in Las Vegas. Interestingly, more of the hotel-casinos here are owned by just a few companies. Many of these companies are now pushing to open new gambling venues overseas.

Japan, in particular, is an extremely desirable location for many casino companies. Only three casino licenses are set to be handed out here. Recent reports claim Japan could become the world’s third-largest casino market over the next few years.

Casino leasebacks could be the best way to generate revenue for these overseas investments. John DeCree, a gambling analyst for Union Gaming, believes this will soon become common in the city.

“It’s definitely a trend in the market,” he said. “As real estate investors are learning the casino industry, they’re realizing it’s a viable and stable real estate investment.”

Some companies are now claiming to be interested in this strategy.

Eldorado Resorts Likely to Sell Las Vegas Property in 2020

Earlier this year, Eldorado Resorts announced that it was acquiring Caesars Entertainment for more than $17 billion. It’s the largest merger between two casino companies in history. Eldorado Resorts is now looking at new ways to generate revenue to make up for the huge price of the acquisition.

Tom Reeg, CEO of Eldorado Resorts, said in a conference call on Wednesday that he’s interested in new real estate deals after the merger with Caesars is officially complete.

“Caesars has a lot of excess real estate both in and out of Las Vegas that could be used for future development, both for ourselves or in a partnership,” he said. “There’s lots and lots of entities that would like to get close to or on the Vegas Strip.”

Exactly which properties could be sold is unknown. It’s likely that these venues would be sold as casino leasebacks, similar to what MGM is currently doing.

It’s an exciting time in Las Vegas. More companies are now being given the opportunity to own property in this city.

More casino leasebacks could be coming soon. Stay tuned for more updates over the next few months!