MGM Resorts reports 3Q loss from its casinos, impact of Las Vegas Strip renovations



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LAS VEGAS — Sometimes the house doesn't win as much as it hopes.

MGM Resorts International earned $40 million less in revenue from its casinos, largely table games, in the third quarter compared to a year ago.

That, plus losses the casino-entertainment company expected from re-opening THEhotel as the 1,117-room Delano at Mandalay Bay in Las Vegas and sprucing up an area along the Strip leading up to the Monte Carlo casino-hotel, led to a quarterly loss of $20.3 million, or 4 cents per share.

It was an improvement compared to the company's year-ago loss of $22.3 million, or 5 cents per share.

Losses, adjusted for non-recurring costs, were 2 cents per share, which missed the average analyst estimate for a profit of 6 cents per share, according to FactSet.

Revenue edged up 1 percent to $2.49 billion, meeting expectations.

The company has focused quite a bit on non-gambling revenue and is heading in that direction even more in Las Vegas by developing an arena, constructing a festival site and attracting more pedestrian traffic by pushing restaurants and shops closer to the Strip's sidewalk.

"Clearly, the Las Vegas visitor today is a much more well-rounded customer looking for many more attractions than just gaming," said Dan D'Arrigo, MGM's chief financial officer and treasurer, after a call with analysts.

Dependent on a healthy convention market, the company is eyeing stronger business Vegas-wide next year and beyond that would boost its properties along the Strip.

"That is critical to the success," CEO Jim Murren told analysts during a call to report the company's third-quarter results.

Alex Bumazhny, an analyst with Fitch Ratings, said the company's performance in Las Vegas was a little disappointing but the bigger story continues to be the slow and steady recovery there which was more pronounced in 2014 heading into next year.

Convention business picking up, which MGM has said they're seeing, continues to be key.

"That's the story they've been largely pushing and selling to Wall Street," Bumazhny said.

The company is expanding its already large Mandalay Bay convention center.

Murren said he sees future casino-resort openings farther north on the Strip bringing in new customers rather than pulling customers away from his and other existing properties.

"We're rooting them on," he said of Genting Group's under construction Resorts World Las Vegas.

Gambling in Macau has been challenging industrywide as of late but MGM has a far smaller presence in the region than competitors. But as with other properties, MGM says it's 51 percent stake in the MGM Macau casino-resort got a boost from regular gamblers as high-rollers dropped off.

Table-game revenue on the main floor there increased 34 percent and the amount the house won was 28 percent compared to 24 percent last year, the company reported.

The company has its eye on a fall 2016 opening for its MGM Cotai casino-hotel.

MGM Resorts owns nine Las Vegas Strip casino-hotels including the Bellagio, MGM Grand and Mandalay Bay. It has a 50 percent interest in the City Center development which includes casino-hotel Aria, Vdara, the Crystals shopping center and Mandarin Oriental hotel.

The company's stock price was up nearly 2 percent to $23.30 in midday trading after releasing its third-quarter results.

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