Fitch Ratings keeps MGM Resorts on Rating Watch Negative but projects US casino growth
Expect a full recovery for Las Vegas gambling to pre-pandemic levels by 2023.
MGM Resorts International’s domestic gaming market has fully recovered to 2019 levels in regional markets nationwide, and Las Vegas continues to exhibit strong domestic gaming demand, according to a report from Fitch Ratings.
Fitch Ratings has maintained the Rating Watch Negative (RWN) on MGM Resorts due to material near-term regulatory uncertainty related to MGM China’s gaming concession in Macau, which expires in June 2022.
MGM Resorts currently operates 10 casinos on the Las Vegas Strip and eight in regional markets, which include Detroit, Mississippi, Maryland, New Jersey, New York, Massachusetts and Ohio. MGM Resorts also has a 56% stake in MGM China, which operates two casinos in Macau SAR.
Fitch’s assumptions include growth over 2019 levels for U.S. regionals in 2021 and 2022. It also expects Las Vegas to see a full recovery in 2023. This may prove to be a conservative estimation because of current domestic trends. MGM Resorts’ domestic operations had $4.7bn in excess cash, net of estimated cage cash, and full availability on its $1.5bn revolver as of September 30, 2021, according to the reports.
The strong performance in Las Vegas, both from slots and table games, is offsetting lingering weakness from the international and convention segments. Fitch is confident that latter will come back more in earnest in 2022. However, this projection considers the potential for renewed pandemic restrictions amid slowing domestic vaccination penetration and uncertainty regarding viral variants. The report also takes into account any future travel restrictions that could result from the pandemic.
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