MGM has now completed the purchase of Boyd Gaming’s 50 percent stake of the Borgata, per a press release issued on Aug. 1.
In the press release, MGM Resorts International Chairman and CEO Jim Murren made the following comments about the deal:
“As the premier resort in Atlantic City, Borgata is a great addition to our growing presence in the mid-Atlantic and Northeast United States.
“We are excited to welcome the talented Borgata leadership team and employees into MGM Resorts and look forward to serving guests with new and exciting opportunities through our diverse resort offerings, entertainment dominance and market-leading loyalty program, M life Rewards.”
In the same press release, Borgata President and COO Tom Ballance said, “We welcome MGM Resorts as the new operator and are excited to further utilize its best-in-class brand to continually bring quality experiences to our guests.”
With the completion of the $900 million sale (Boyd will receive approximately $589 million after paying its percentage of outstanding debt), MGM now owns 100 percent of Atlantic City’s top-earning casino, and will also take over day-to-day control of the property, a job Boyd Gaming had been performing up to this point.
MGM, Boyd, and Borgata
Soon after opening its doors in July 2003, Borgata became the top-grossing casino in Atlantic City, and is considered the crown jewel of the city’s gaming industry. During that time, the property has been jointly owned by Boyd Gaming and MGM, with the two gaming giants each owning half of the lucrative Borgata.
Interestingly, MGM nearly sold its stake in Borgata back in 2010. Trying to complete a deal to break into the lucrative Macau market, MGM was ready to ditch its Atlantic City interests. But when a Macau deal never materialized, Atlantic City regulators allowed MGM to reclaim its stake in the casino (which was being held in trust) in 2014.
Breaking down the deal
A closer look at the deal shows MGM will take control of the Borgata, as well as its non-gambling Water Club hotel (which the two companies also jointly owned) located next door.
In addition to the $589 million windfall, Boyd will also receive some money down the road, as the deal includes provisions for Boyd to receive its share of the $160 million of outstanding property tax refunds the city still owes Borgata.
These tax refunds have been a major point of contention between the casino and the city, and nearly accelerated Atlantic City’s plunge into bankruptcy.
And of course, since this is a multi-national gaming company, the deal gets a bit complex. As MGM originally reported in June, Borgata will transition to MGM Growth Properties, which will then lease the property to another arm of MGM Resorts International that will be responsible for operating Borgata … got all that?
Implications for online gambling in New Jersey
The deal could also have ramifications for Borgata’s online gambling sites, as well as an increased role for MGM in the US online gaming market.
MGM has been one of the most vocal champions of legalized online gambling in the US, and now that it’s in full possession of the top-earning New Jersey online casino, MGM could start positioning itself to branch out into other states. And as I noted in a previous column, this could help facilitate interstate agreements.
For Borgata specifically, the word on the street is the casino might be in the market for a new online gaming partner. We will probably find out sooner than later if it was MGM that was pushing for the change.
The casino’s current partner, bwin.party, was sold to GVC earlier this year. While GVC has stated its intention to continue on in the US online gaming market, there have been multiple rumors that Borgata is weighing its options, including a migration to a platform that is currently operating under Borgata’s interactive gaming license, Pala Interactive.
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