In August of 2018, MGM Springfield officially opened its doors to the public. Since that time, the Springfield, Massachusetts gambling venue has struggled to generate revenue. Officials within MGM Resorts International spoke about the low revenue figures to the media this week.
This venue has been a major disappointment for one of the country’s biggest casino operators. Today, we’re going to talk about why this is. We’ll also discuss what steps MGM may take to change this downward trend.
Let’s get into it!
Massachusetts Proves to Be a Difficult Casino Market
For many years, lawmakers in Massachusetts banned all forms of casino gambling. In 2011, the state finally agreed to a set of laws that allows three new land-based casinos to open. In 2018, MGM Resorts International opened the state’s first gambling venue in the city of Springfield.
Expectations for this venue were high. Many considered Massachusetts to be one of the most lucrative new casino markets in the country. By the time MGM Springfield opened up, almost everyone agreed it would be extremely successful.
For a time, these theories were correct. MGM Springfield drew in many visitors early on and began generating serious revenue. As time went on, however, these earnings began to drop. One reason for this was the opening of Wynn Resorts’ Encore Boston Harbor casino-resort.
This new casino instantly captured a huge portion of the MA casino market. Many gamblers who previously gambled inside MGM Springfield began making the switch to the Encore. It was a tough break for MGM Resorts International, who didn’t anticipate their market to be taken over so quickly.
Despite the company’s best efforts, things don’t seem to be improving for MGM Resorts. A company official spoke about this disappointing performance to the media this week.
MGM Springfield Still Struggles to Generate Revenue
MGM Resorts International has been undergoing some massive changes in recent months. Last year, the company sold some of its biggest properties in Las Vegas. Just last week, CEO Jim Murren announced he’s stepping down.
There’s a lot to juggle here. Murren is continuing to run the company until a replacement is chosen. This week, Murren commented on the MGM Springfield property and doesn’t seem pleased with the venue’s performance.
“MGM Springfield has admittedly performed below our expectations, and we’ve recently made some changes there to better position the property,” he said.
It’s surprising for some to hear that MGM continues to invest in this venue. Many expected the company to sell it and simply take the losses. That does not appear to be the case.
For now, MGM Resorts International wants to continue running its only Massachusetts property. With some changes, perhaps this venue can once again capture the state’s market.
Massachusetts isn’t the only area that MGM is continuing to invest in.
Macau May Soon Become Profitable Again For MGM Resorts
Macau is one of the world’s largest gaming markets. Many of the world’s top casino companies invest in property here, including MGM Resorts. Unfortunately, revenue from this territory has been dropping for more than a year.
Throughout 2019, tourism in Macau was down. The US-Chinese trade war had taken a toll on China’s economy, causing fewer nationals here to gamble. Macau relies on Chinese high rollers and as less began visiting here, revenue started to tumble.
Recently, the coronavirus has hurt this territory. As the 2019-nCoV virus spreads throughout China, less people are able to travel into Macau. Recently, officials in this territory decided to shut down all the casinos in order to prevent infections.
This casino shutdown is costing companies millions of dollars a day. It finally seems as if infection rates are beginning to even out and Macau may finally become a profitable casino market once again. Several investment groups have recommended people buy stock in MGM Resorts as the Macau situation improves.
2020 will be an important year for MGM Resorts. Hopefully, the company’s new CEO can be even more successful than Jim Murren.
Stay tuned for more casino news over the next few months!