MGM Resorts International has made a strategic decision to withdraw from the New York casino bidding, a move that CEO Bill Hornbuckle believes aligns with a disciplined approach to capital allocation. This decision comes as MGM eyes future opportunities, particularly focusing on its new integrated resort development in Japan.
During the third-quarter earnings call, Hornbuckle addressed the company’s challenges and prospects. Despite a dip in MGM’s stock value following the call, he remained optimistic, explaining that various factors contributed to the downturn in Las Vegas. From a decrease in international visitors to the impact of Spirit Airlines’ bankruptcy and increased traffic from Southern California, several issues have affected the Vegas market.
“While we don’t expect the dynamic to change overnight, we are actively working on initiatives to increase visitor numbers,” Hornbuckle conveyed, indicating MGM’s commitment to revitalizing its Las Vegas operations.
The situation in Las Vegas has been challenging, with MGM reporting lower-than-expected results. The Las Vegas Strip has experienced a decline in tourism throughout 2025, a trend driven by macroeconomic uncertainties leading to tighter discretionary spending. According to the Las Vegas Convention and Visitors Authority, September saw an 8.8% drop in visitation compared to the previous year, marking the ninth consecutive month of declining visitor numbers.
Caesars Entertainment also reported similar struggles, with occupancy rates falling and table game performance declining. Caesars CEO Tom Reeg highlighted the reduction in city-wide visitation as a key factor.
For MGM, third-quarter figures reflected these challenges, with revenue from the Strip dropping to $2 billion from $2.1 billion the previous year. The decline was partly attributed to ongoing room renovations at the MGM Grand and reductions in food and beverage revenue, table hold percentages, and revenue per available room. Consequently, adjusted EBITDAR for the Strip segment fell to $601 million from $731 million in the same period last year.
The decision to withdraw from the New York casino bid was a significant focus of the earnings call. MGM had reached a tentative agreement with the City of Yonkers, which included a minimum tax contribution of $400 million. However, changing state guidance on license durations prompted MGM to reconsider its position. The new policies allowed for potentially shorter license terms than MGM had anticipated, leading to the decision to redirect investments elsewhere.
“While we initially found the return attractive, the evolving market conditions led us to believe our capital is better invested elsewhere,” Hornbuckle explained, emphasizing MGM’s strategic pivot away from New York.
This withdrawal resulted in a non-cash goodwill impairment charge of $256 million and approximately $93 million in non-cash write-offs related to MGM Empire City.
Looking ahead, MGM is turning its attention to international opportunities, particularly its MGM Osaka resort in Japan, slated for a 2030 opening. The $8.9 billion development was a highlight at the Expo 2025 conference in Osaka, underscoring MGM’s commitment to expanding its global footprint. To support this endeavor, MGM has secured a $300 million credit facility, which could extend to $450 million, with favorable interest terms.
Despite the challenges in Las Vegas, MGM’s overall performance in the third quarter showed resilience, with net revenue reaching $4.3 billion, slightly exceeding expectations. However, earnings per share fell to $0.24 from $0.54 the previous year, missing estimates. Following the earnings report, MGM’s stock dropped 8% in after-hours trading but recovered slightly the next day.
Investors remain hopeful about MGM’s potential, seeing the current stock price as undervalued. Hornbuckle pointed to BetMGM as a catalyst for unlocking value and improving cost structures in Las Vegas. Analyst Barry Jonas of Truist Securities, while adjusting his price target for MGM, acknowledged the company’s diverse operations, which could support stock value despite setbacks in Las Vegas. Similarly, Chad Beynon of Macquarie maintained an “outperform” rating, citing MGM’s strong balance sheet as a positive factor.
As MGM navigates its current challenges, the company remains focused on long-term growth, particularly in international markets like Japan, while continuing to address the dynamic conditions in Las Vegas.
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