MGM operates casinos and entertainment properties in Las Vegas, Massachusetts, Detroit, Mississippi, Maryland, and New Jersey, including marquee names such as the Bellagio, Mandalay Bay, and MGM Grand. The entertainment giant is poised to do brisk business once vacation and recreation travel gain traction in this year’s second half.
In addition to its physical casinos, which remain incredibly popular, MGM Resorts used the pandemic to beef up its sports betting and online gaming business to the point where it is now viewed as a legitimate rival to sport betting sites.
MGM has big hopes for sports betting and online gambling in North America. The addressable market is expected to be worth $20.3 billion by 2025. The company has increased its market share guidance from between 15% and 20% to 25%. And its betting app, BetMGM, already boasts a market share of 22% in active jurisdictions as of February 2021.
MGM’s brick-and-mortar footprint, particularly on the iconic Las Vegas strip, gives it unparalleled brand recognition in the industry. This cachet can help accelerate customer acquisition and give BetMGM a competitive advantage over digital-only rival DraftKings, which lacks physical casinos. The real-world properties also allow MGM to offer a unique omnichannel experience with a loyalty reward program that includes real-world experiences.
MGM’s share prices have risen 32% yearly as investors get more optimistic about its sports betting and traditional casino businesses. But with a price-to-sales (P/S) multiple of four and a trailing price-to-earnings (P/E) multiple of 13, the stock is still a relatively good value.