Executive Summary / Key Takeaways

• MGM Resorts International is strategically transforming into a diversified global gaming and entertainment powerhouse, leveraging its iconic physical resorts and rapidly expanding digital platforms to unlock significant shareholder value.
• The company's digital segment, including BetMGM North America and MGM Digital's international operations, is experiencing robust growth and profitability inflection, with BetMGM projecting approximately $200 million in EBITDA for FY2025 and initiating cash distributions to MGM Resorts.
• Despite a "choppy period" in Las Vegas, MGM's luxury properties continue to perform strongly, supported by strategic capital investments, a robust convention calendar for 2026, and the high-value Marriott partnership.
• MGM China is a standout performer, achieving record EBITDAR and market share by focusing on premium mass customers and non-gaming attractions, contributing substantial dividends to the parent company.
• Disciplined capital allocation, evidenced by the strategic divestiture of MGM Northfield Park and the withdrawal of the Empire City casino license application, alongside aggressive share repurchases, underscores management's commitment to maximizing returns in a dynamic competitive landscape.

MGM's Global Vision and Market Position: A Diversified Entertainment Powerhouse

MGM Resorts International is a global gaming and entertainment leader, strategically positioned across integrated resorts in Las Vegas, regional U.S. markets, Macau, and a rapidly expanding digital footprint. The company's overarching strategy centers on diversified growth, a relentless focus on premium and luxury market segments, and disciplined capital allocation. This approach has allowed MGM to leverage its iconic brand and extensive customer insights, particularly through its MGM Rewards program which boasts over 50 million members, to create a cohesive and compelling investment narrative.

The broader casino market is undergoing significant evolution, with the global casino market valued at $310.8 billion in 2024 and projected to reach $561.9 billion by 2033, representing a compound annual growth rate (CAGR) of 6.8% from 2025 to 2033. This growth is fueled by both the expanding digital frontier and the reinvention of land-based casinos as comprehensive entertainment destinations. Non-gaming revenues are increasingly vital, with projections showing Macao's casino operators expecting $5.3 billion from non-gaming activities in 2025, up from $4.9 billion in 2024. In Las Vegas, the average visitor in 2024 spent $615 on food and drink, $281 on shopping, and $160 on local transportation per trip, highlighting the importance of a holistic resort experience.

MGM operates in a highly competitive arena, facing direct rivals such as Caesars Entertainment (CZR), Wynn Resorts (WYNN), Las Vegas Sands (LVS), and Penn National Gaming (PENN). While Caesars boasts a vast portfolio and strong loyalty programs, MGM differentiates itself with a stronger emphasis on premium entertainment and global diversification. Against Wynn's ultra-luxury focus, MGM offers a broader range of amenities and accessibility to a larger customer base. In Macau, MGM competes with Las Vegas Sands by emphasizing entertainment and U.S.-based digital expansion. Penn National Gaming, with its strong regional and digital presence, challenges MGM in online sports betting, though MGM's integrated physical-digital offerings provide a unique omnichannel advantage. MGM's competitive moats include its powerful brand recognition, extensive global network of resorts, and the synergistic integration of its digital and physical operations.

Technological Edge: Fueling the Digital and Physical Experience

MGM's strategic vision is deeply intertwined with its technological differentiation, which underpins both its digital expansion and the enhancement of its physical resort experiences. The company's core technology stack includes the BetMGM platform, the LeoVegas global online gaming operations, and an in-house tech stack bolstered by the acquisition of Tipico's U.S. sports betting technology. These platforms are crucial for delivering seamless, engaging, and personalized customer interactions.

The tangible benefits of this technological focus are evident across the business. For BetMGM, omnichannel players—those who engage with both the digital platform and physical resorts—are three times more valuable than digital-only players. This synergy has driven a 30% growth in Nevada monthly active users and a fourfold increase in continued play in home states post-signup. MGM Digital, encompassing LeoVegas and other international online businesses, is projected to achieve over $1 billion in revenue with healthy double-digit margins, demonstrating the significant financial upside of these investments. On the operational front, MGM is leveraging AI-driven chatbots and digital check-in systems, contributing to over $150 million in EBITDA enhancements expected in 2025.

MGM's commitment to innovation extends to significant R&D initiatives. The company launched its in-house Sportsbook product in an initial market in Q3 2025, following the integration of Tipico's technology. Furthermore, MGM launched its live dealer platform from the MGM Grand casino floor in May 2025, offering unique, real-time gaming content to operators in regulated markets outside the U.S. These developments aim to enhance module efficiency and improve customer engagement. For investors, these technological advancements are critical as they contribute to MGM's competitive moat, drive higher average selling prices (ASPs) and lower operational costs, improve margins, and solidify its market positioning for long-term growth. The ability to innovate and integrate technology across its diverse portfolio provides MGM with a distinct advantage in attracting and retaining a broad spectrum of customers.

A History of Strategic Evolution and Capital Discipline

MGM Resorts International, incorporated in 1986 and rebranded from MGM MIRAGE in 2010, has a history marked by strategic evolution and disciplined capital allocation. This journey has shaped its current position as a global gaming and entertainment leader. Key historical moves, such as the 2019 acquisition of MGM Northfield Park operations for $275 million, set the stage for later portfolio optimization. The company has also aggressively returned capital to shareholders, repurchasing over 40% of its outstanding shares since early 2021.

In 2025, MGM continued to demonstrate its capital discipline. The company made a challenging decision to withdraw its application for a commercial gaming license for Empire City in Yonkers, New York. This decision was driven by a reassessment of competitive and economic assumptions, including a newly defined competitive landscape with four proposals clustered in a small geographic area and an expected 15-year license term instead of the anticipated 30 years. This resulted in a $256 million goodwill impairment and a $52 million impairment of the existing gaming license. Subsequently, in October 2025, MGM agreed to sell the operations of MGM Northfield Park for $546 million in cash, representing a 6.6x multiple on Adjusted EBITDA for the trailing twelve months ended June 30, 2025. This sale, at a significant premium, underscores MGM's commitment to optimizing its portfolio and allocating capital to opportunities with attractive returns.

Segment Performance: A Diversified Growth Engine

MGM's diversified portfolio, spanning Las Vegas, regional U.S. markets, Macau, and digital platforms, proved resilient in the third quarter of 2025, with consolidated net revenues increasing 2% year-over-year. This growth was primarily fueled by strong performances in MGM China and MGM Digital, which offset a "choppy period" in Las Vegas.

Las Vegas Strip Resorts

The Las Vegas Strip Resorts segment experienced a 7% decrease in net revenues to $1.98 billion for the three months ended September 30, 2025, and a 5% decrease to $6.28 billion for the nine months ended September 30, 2025. Segment Adjusted EBITDAR declined 18% to $600.9 million in Q3 2025, with margins at 30.30%. This decline was primarily attributed to a $25 million disruption from the MGM Grand Las Vegas room remodel, a decrease in table games win percentage, and broader softness in RevPAR impacting properties like Luxor and Excalibur. Additionally, a $27 million decrease in business interruption proceeds and an increase in insurance expense contributed to the EBITDAR decline.

Despite these headwinds, MGM's luxury properties generated record Q3 slot win, indicating continued strength at the high end. Management anticipates stabilization in the fourth quarter of 2025 and growth into 2026, driven by the completion of the MGM Grand remodel by October 2025, a strong return of groups and conventions (over 90% contracted for 2026), and the successful Marriott (MAR) partnership, which is expected to book 900,000 room nights in 2025. October 2025 is projected to be the strongest room night month ever for Marriott bookings.

Regional Operations

Regional Operations demonstrated stability, with net revenues remaining flat at $956.9 million for Q3 2025 and increasing 1% to $2.82 billion for the nine months ended September 30, 2025. Segment Adjusted EBITDAR decreased slightly by 1% to $295.5 million in Q3 2025, with a margin of 30.90%, primarily due to a $6 million decrease in business interruption proceeds. The segment achieved an all-time record slot win in Q3 2025, with several properties reporting record total revenue and EBITDAR. Targeted capital improvements at Borgata, including elevated VIP experiences, led to casino GGR growth outpacing the market. The strategic decision to sell MGM Northfield Park operations for $546 million and withdraw the Empire City commercial gaming license application reflects a focus on optimizing the portfolio for best-in-class, market-leading properties.

MGM China

MGM China was a significant growth driver, with net revenues increasing 17% to $1.09 billion for Q3 2025 and 7% to $3.23 billion for the nine months ended September 30, 2025. Segment Adjusted EBITDAR surged 20% to a record $284.0 million in Q3 2025, despite an estimated $12 million typhoon-related impact, achieving a margin of 26.10%. MGM China ended Q3 2025 with a record market share of 15.5% and was pacing to a 16.5% market share and over $100 million in EBITDA for October 2025. The focus on premium mass customers, supported by new offerings like the Alpha Gaming Club at MGM Macau and the conversion of 160 rooms into 63 suites at MGM Cotai, is driving market growth. MGM China's strong cash flows contributed an $85 million dividend to MGM Resorts in September 2025.

MGM Digital

The MGM Digital segment, comprising LeoVegas and other consolidated international online gaming operations, saw its revenue increase 23% to $174.0 million for Q3 2025 and 13% to $465.9 million for the nine months ended September 30, 2025. The segment reported an Adjusted EBITDAR loss of $23 million in Q3 2025, consistent with the prior year. For the full year 2025, MGM Digital expects EBITDA losses to approach $100 million due to increased investment in its Brazil venture. However, management views this as a disciplined investment, with the Brazil venture showing encouraging quarter-over-quarter growth and a long-term opportunity for $1 billion in revenue with significant margins.

BetMGM North America Venture

BetMGM, an unconsolidated affiliate, reported outstanding results, with MGM's share of income from unconsolidated affiliates being $23.7 million in Q3 2025. The venture raised its full-year 2025 EBITDA guidance to approximately $200 million, representing a significant turnaround. BetMGM is expected to begin distributing cash to MGM Resorts in Q4 2025, with an initial distribution of at least $100 million. This marks a crucial evolution from positive EBITDA inflection to a business generating ample cash for growth and distributions, validating its business model.

Strategic Initiatives and Future Growth Catalysts

MGM's strategic initiatives are designed to capitalize on global growth opportunities and enhance shareholder value. The company is actively pursuing large-scale development projects, including MGM Osaka in Japan, which is targeted for a 2030 opening. MGM remains confident in achieving a high-teens return on this project, given its unique position as the sole integrated resort in a country of over 120 million people. The company's equity commitment for MGM Osaka is JPY 428 billion (approximately $2.40 billion USD), with JPY 361 billion remaining to be funded over the next three years. To support this, MGM secured a JPY 45.20 billion (approximately $300 million USD equivalent) yen-denominated credit facility in October 2025 at attractive rates.

Further international expansion is underway in Dubai, with an expected opening date in the second half of 2028. The building is currently on the fifth floor of the MGM Tower and is due to complete in Q3 2027, designed to accommodate potential gaming operations if local rulers approve.

Domestically, MGM is focused on operational efficiencies and customer experience enhancements. The company expects to implement over $150 million in EBITDA enhancements in 2025, with 35% from revenue actions and 65% from cost savings, leveraging technology like AI-driven chatbots and digital check-in. This continuous improvement mindset aims to improve efficiency and responsiveness to consumer behavior.

Share repurchases remain a key component of MGM's capital allocation strategy. Management views the current share price as significantly undervalued, with an implied multiple of under 3x trailing 12-month asset EBITDA for its core business when stripping out MGM China and assigning a consensus value to BetMGM. This perceived undervaluation, compared to the 6.6x multiple achieved in the Northfield Park sale, reinforces the company's aggressive share buyback program as a compelling use of cash.

Competitive Positioning and Risks

MGM maintains a strong competitive position through its diversified portfolio and premium brand. Its integrated digital-physical offerings, particularly with BetMGM, provide a unique omnichannel experience that differentiates it from many rivals. In Macau, MGM China's focus on premium mass and non-gaming attractions has allowed it to consistently outperform and gain market share against established players like Las Vegas Sands. In regional markets, MGM's properties are often market leaders, and strategic investments, such as those at Borgata, enhance its competitive edge.

However, MGM faces several risks. The Las Vegas market experienced softness in mid-2025 due to decreased international visitation, reduced Southern California drive traffic, and airline capacity cuts, leading to concerns about value perception. Management has responded by adjusting pricing and emphasizing value, but the market remains highly competitive. The withdrawal of the Empire City casino license application highlights regulatory and competitive challenges in new market entries. Cybersecurity remains a persistent risk, as evidenced by the 2023 incident and ongoing regulatory investigations. Macroeconomic headwinds, including inflation and consumer spending shifts, could impact discretionary spending on leisure and entertainment.

Conclusion

MGM Resorts International is executing a compelling investment thesis centered on diversified growth, technological leadership, and disciplined capital allocation. The company's ability to leverage its iconic brand and extensive physical footprint with its rapidly expanding digital platforms, particularly BetMGM's profitability inflection and MGM Digital's international ambitions, positions it for long-term value creation. While challenges in the Las Vegas market and the strategic withdrawal from the Empire City casino license underscore the dynamic competitive landscape, MGM's management has demonstrated agility in adapting to market conditions and optimizing its portfolio.

With significant growth catalysts in Japan and Dubai, ongoing operational enhancements, and a commitment to aggressive share repurchases driven by a perceived undervaluation, MGM presents a robust investment opportunity. The company's focus on premium experiences, coupled with its technological advancements in online gaming and customer engagement, reinforces its competitive standing. Investors should recognize MGM's strategic evolution as a global entertainment leader, poised to capitalize on the expanding casino market and deliver sustained returns through its integrated and diversified business model.