MGM’s Big Bets: Bill Hornbuckle on Las Vegas, Japan, and Digital Expansion

[Jonathan] (0:05 – 1:47)

[Jonathan] (0:05 - 2:13)
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Welcome to The World According to Boyar, where we speak with top investors, best-selling authors, and business leaders to uncover the smartest ways to find value in the stock market.

I'm your host, Jonathan Boyar. Our guest today is Bill Hornbuckle, CEO of MGM Resorts International, a publicly traded global entertainment and hospitality company with a market capitalization north of $8 billion. MGM is a company Boyar Research has followed for decades and a company in which Boyar Asset Management owns shares. We're going to try and cover a lot of ground today—from the hospitality business, MGM’s digital transformation, iGaming and sports betting, capital allocation, and what Bill sees ahead for Las Vegas and for MGM.

Bill, thanks so much for joining us.
My pleasure. Thanks for having us.

As I said earlier, I'm really excited. Before we get into the business side of MGM, I wanted to start somewhere fun. You might legitimately have some of the best perks of any CEO in America.

You host some of the world's biggest events and meet some of the most iconic performers on the planet. Has there been a few moments you can share with us that are surreal?

[Bill] (2:13 - 3:19)

. I came out of college, thought I'd spend a couple years here and go off into the hotel business and just never left. I got somewhat lucky in the early days, but back in those days, the mob was literally still here. It was the late ’70s, early ’80s, and although they were transcending out and folks like Steve Wynn and others were taking hold, meeting some of those characters—and they were characters—was something I'll always remember.

Modern day, in my current job, signing up originally Lady Gaga for a $100 million contract, standing on stage with her, hugging me, was like, okay, is this a real moment?
What was that like?
It was fun.

It was exciting. She's a great human being—as casual and as cool as you would hope and think she could be or should be—and it was one of those moments. It was like, you know, you pinch yourself and go, wow, this is great.

This is a good day. Not every day has been a good day. The day we opened Allegiant Stadium, that was a big push.

The day the Golden Knights celebrated their first Stanley Cup, a huge push. So the whole sports evolution here has been pretty incredible.

[Jonathan] (3:19 - 3:21)
I bet you had good seats to the Super Bowl.

[Bill] (3:21 - 4:03)
Yeah, it was pretty good. We're hosting Formula One this weekend. The generation of that whole thing into what it's become for the city—I think ultimately in the sport itself—it's been great. Getting to meet those guys, getting to meet…

I'm a car guy by nature, and so going into McLaren's home place outside of London, meeting Zak and seeing spectacular stuff—just fun stuff. And so I presumably think I have one of the better jobs in America, one of the more fun. Yeah, there's pressures on it.

You've got tens of thousands of employees who demand and need certain things. And so not every day is [fun], but the vast majority of it is. People say, well, what business are you in? I say, I'm in the entertainment business in the context of we're here to entertain folks and make it a great time for all.

[Jonathan] (4:04 - 4:26)
Speaking of the entertainment business, I mean, you really are in a service business and you have a variety of customers ranging from super VIPs who are gambling millions of dollars to people at the low-stakes blackjack table. What does it take to get to that—I’ve always, just for my own curiosity, wanted to know—super VIP level? What is it like? What kind of perks do you get?

How is it different than the average experience?

[Bill] (4:27 - 5:37)
Yeah, I think something Vegas has always been good at and continues to be great at is personalized one-on-one attention. And so we have a hosting crew in our company of almost 500 people. And if I include Macau, that number almost doubles.

And their day job is to host customers, know everything about them, know their birthday, their children's names, what they like to do, how they like to do it. And frankly, hold their hand, get them here as often as ultimately we potentially can, hold their hand, make sure they stay loyal to the company, and give them just a great time. And so, I mean, you all know this—this is not folklore—but we fly them around in G650s.

They get to stay in places called The Mansion, and they get to meet backstage Lady Gaga from time to time and others, Bruno Mars, et cetera. And so, it's interesting though, what perks their interest. This past Monday night, we hosted the Dallas Cowboys, the Raiders. We had three very big customers in our box and Tom Brady was next door.

And all they wanted to do was meet Tom Brady. So we had to try to make that happen. And so what motivates individuals is always interesting, particularly around our industry—usually fun.

And I think we as a company, but frankly we as an industry, do the high end probably better than anybody else in the world.

[Jonathan] (5:38 - 5:51)
No, absolutely. And one of the stories behind MGM—or the growth story—is digital through MGM Rewards, BetMGM, et cetera. How do you have that personal touch across both physical and digital?

[Bill] (5:52 - 7:03)
It's difficult. I mean, because the digital business obviously touches millions and millions of customers. We've now grown this thing from 18 to this coming year, we'll do over 3 billion in top-line revenue.

So it's becoming a very significant piece of the company. We do it through our BetMGM partnership domestically, as well as our owned-and-operated businesses in Europe and now in Brazil. But the idea of omni-channel, where you can touch us both at home and here, is meaningful to folks.

About 15% of our database—folks touch both products and get recognized and rewarded for touching both products. And so it's, for us, a relatively unique proposition. Obviously DraftKings, FanDuel, others are major competitors, but they don't own brick and mortar. And so the opportunity, whether it's in Michigan, to bring somebody into the casino there or here in Las Vegas and join together and recognize their spend both online as well as brick and mortar is a unique position.

And frankly, given the tools and the assets we have, we can do it probably better than most. We've invited for this weekend—Formula One’s a great example—150 of our guests out there will be BetMGM guests. And so they'll be digital customers who earned their way to this experience through digital.

[Jonathan] (7:03 - 7:09)
What does that mean? How do they earn their way? Is that the amount of money they bet, or is it how often they go on, or a combination thereof?

[Bill] (7:10 - 7:48)
It's theoretical. It's the amount of money that theoretically they've put in play, which earns them certain perks along the way. And just like brick and mortar, we have high rollers who are domestic online, whether it's iGaming casino in the five or six states that we're in or our sports betting itself.

And they “earn” their way through our rewards programs into various things that they can do. We hosted folks for the Super Bowl here. We've got the Final Four coming next year.

We've got a lot of attention around that. People want to come for that. We have the college football [championship] in ’27, the championship game.

And so people focus on certain things they want to do and quote “earn” their way to those things.

[Jonathan] (7:49 - 7:57)
Through BetMGM and the rewards program, how much information do you actually know about someone and how do you utilize that to your advantage?

[Bill] (7:58 - 8:51)
Go back to what we do here. It is personal relationships. So our BetMGM team also has hosts who get to know and understand their customers and what they want.

Obviously, in a digital environment, their behavior you can follow intimately—I mean, very closely you can follow behavior, not as much and not as easily here in brick and mortar, but clearly in digital.

But what we don't know is a lot about them. But ultimately we do outreach to them and go back to your [example]: your children's birthday, or somebody in Detroit who's a football fan—well, what a surprise, we have a box at the Lions.

And so being able to say to them, “Hey, next Sunday, want to come down to a game? We'd love to take you and your son who enjoys the Lions to a football game.” That's a point of differentiation that others can do, but the combination of what we have here, particularly in Las Vegas and some of our regional properties—National Harbor, et cetera—and the assets we have exposure to make it a fairly compelling and unique proposition.

[Jonathan] (8:52 - 9:05)
Those regional properties—obviously you have the Las Vegas hotels, which are the biggest part of your gambling business, but you also have the regional properties spread across the country. Are they core to your business? Do you need them to operate well?

[Bill] (9:06 - 10:05)
Yeah, I mean, they're a big part of our business. The word “core” might be a push, but we have eight of them. We've sold one, so we'll have seven.

They earn us about a billion dollars a year. In an enterprise that does about four and a half a day when it's all said and done. So they're a sizable piece of our bottom line.

They're unique. Five of them are leading market takers in each market that they're in—for Borgata in Atlantic City, National Harbor in Maryland, MGM in Detroit, by way of example, are market leaders in their own respects. And the ability for people to go in there and enjoy that experience and ultimately get rewarded to come to Vegas is a common thing.

And so we share the common database that all feeds into MGM Rewards. And then those customers can do as they like. We've now positioned an airplane, by way of example, for our high end in Borgata in New Jersey, where we can take customers up and down the coast.

We take them to D.C. We take them to Mississippi. They want to do the Beau [Rivage] for a certain experience.

And so most of them—not all of them—are big enterprises unto themselves as well.

[Jonathan] (10:05 - 10:18)
I mean, I guess what I was trying to get at is if you got rid of the regional casinos and you got a good price for them, would that impact your Las Vegas business or your core business in general?

[Bill] (10:19 - 11:18)
To a degree, but not significant. Now, if we impact our digital—you know, this is now becoming a fairly intricate web between digital and, I'll use Detroit as the example—Michigan, our Detroit property, Las Vegas, where both iGaming and sports betting are allowed, there's a pretty direct connectivity between those customers and all of that activity.

That's a case and one that's growing in meaning. One of the reasons people stay and play on BetMGM on a digital device is that they get access to whether it's local events and local things they want to do, or once or twice a year to come out for something special here. And so, yeah, we like our portfolio. There are a couple of assets that aren't market-leading.

We've got to figure out the consternation in New York, ultimately, what to do there. But, you know, when it comes to New Jersey, Michigan, Maryland, Mississippi, we love what we have there and what they represent unto themselves. So is it core?

No, Las Vegas is still core, but it's an important piece of our pie.

[Jonathan] (11:18 - 12:34)
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Now, let's get back to the show. You'd mentioned iGaming and Michigan.

For those who don't know—and this is a big growth driver for MGM, and something I got personally really excited about—what is iGaming?

[Bill] (12:35 - 13:31)
It's digital casino gaming. You can go online, play slots. You can do live dealer.

So what that simply means is you can click on a link that has a live dealer that will deal to you. We have a live-dealing studio here in Las Vegas. We have one in Michigan.

We have one in New Jersey that services [players]. So like 15% of our players who play table games online do it through a live dealer, which is fascinating unto itself. And so that's a great experience for those who enjoy that.

And the pace of the game, they consider it more real. They consider it more trustworthy in some way, shape, or form. God knows why, because it is trusted.

But they do. And so it's a unique proposition that people enjoy. There are jackpot links that ultimately tie to brick-and-mortar casinos as well.

And so the idea of linking jackpots across the totality of our products is fun and interesting for people. And so it's all of the gaming activity that you would expect in a casino—the types of games, the types of slot machines—you can play online.

[Jonathan] (13:31 - 13:38)
So essentially, it's a casino without the cost of building a casino.

Oh, yeah. So the margins must be insane.

[Bill] (13:39 - 14:15)
Well, it's a very aggressive competitive space. And so, look, we think ultimately the margins [are] in the mid-20s in this business, but as long as there's a DraftKings, a FanDuel, pick your favorite—Fanatics, your favorite market player—I think you'll see margins within the mid-20s. But acquiring customers—the cost of acquiring customers, the length that you need to keep them involved, the time before they become profitable—

It's not unlikely for us to put a $500 stake on a customer to say, “Make your first bet and we'll give you $500.” And so then the time it takes to earn that back and then some is [long] sometimes.

[Jonathan] (14:16 - 14:30)
And that's where the strategy of also having a brick and mortar gives you an advantage over the DraftKings of the world.

Exactly. Interesting.

So how many states in the US have iGaming now?

[Bill] (14:30 - 15:06)
Six. There's three that are really meaningful: Michigan, New Jersey, and Pennsylvania. And those six states, interestingly, drive over 60% of our top-line revenue.

So we have sports betting—and I'm going to give you a bad number here, I think it's 28 or 29—but we have sports betting in a significant, back four acts. But the iGaming activity is big for the industry. It's big for us. And particularly in those states, where gaming and the ability to tie in—to two of the three for us—brick and mortar to digital because we've had a database for a considerable period of time in brick and mortar to be able to leverage into that from a marketing perspective has been meaningful.

[Jonathan] (15:07 - 15:13)
So why only six states, where sports gambling has 28, 29, or however many states it is?

[Bill] (15:13 - 15:50)
It's all about legislation and about making it permissible. So regulators, state legislators, governors all have a view. Most of the states we're in are blue.

It emanates from betting and casinos on the ground for jobs. And it migrates itself from there. Many are considering it.

Obviously, it's a great form of tax revenue. The challenge we face is there's black-market sites all over anywhere today. And so if I'm in any one of those states that doesn't have it, I can simply go to a black-market site, not pay tax and not [have it] to the benefit of the industry or the state for that matter.

So we continue to push the agenda. But as of today, we have six.

[Jonathan] (15:50 - 16:03)
But as the recent scandals show you, I mean, branding is very important. I mean, if you can't regulate it, they could cheat you.

I mean, isn't that a big differentiator?

[Bill] (16:03 - 16:18)
It is. That's why we've been able to grow an industry that's well beyond the [old] industry. I mean, we're going to push 3 billion.

Some of our competitors are going to push 4 and 5 billion this year. So it's grown to, I think next year we're pushing a $15 billion industry because of that very notion.

[Jonathan] (16:19 - 16:23)
And five years from now, how many states, if you had to guess, would have iGaming?

[Bill] (16:23 - 16:48)
I would hope to think we can double it by then would be a realistic goal. There are big states like Texas that just simply don't want gaming today. We have ongoing dialogue around sports betting and brick-and-mortar casinos.

There are other states like California and Florida, which are influenced by tribes and tribal gaming. And so that gets very complicated very quickly. There are other states—Ohio, Illinois, New York—which I think at some point will, but time will tell.

[Jonathan] (16:49 - 16:57)
So we're talking about the US business. But how big of an opportunity globally is the iGaming business?

[Bill] (16:58 - 18:24)
We are now in some more mature markets in most countries. We're in 11 markets. We've just added Brazil this year.

We have BetMGM now—the actual brand itself—which we control alone in the UK, Sweden, and one other place, I want to say the Netherlands. And we're expanding on that brand. We bought something called LeoVegas.

We bought our own technology platform, our back end. We bought something called Tipico, our own sports betting platform. And so we've established ourselves now as an operator.

That business will generate close to a billion top-line as well this year. And to us, it's new. I mean, we're in our third year of this.

So it's an evolving, growing business. It's for this company called LeoVegas that we bought back four years ago—we got it in place three years ago.

It's been really dominant in the Nordics. And so we like our position there. We have 30% market share in many of those places.

And we're trying to spread that out on the back of, obviously, MGM's brand, on the back of now our knowledge. And we're not yet at a point with that business where we can tie it to Las Vegas. I mean, yeah, every once in a while, somebody will do the omni-channel.

That'd be nice and interesting. But unto itself, almost all of them are sports betting and iGaming combined.

And so we have this unit that's continuing to grow. We think Brazil is the big market to go. We see it as a 7 or 8 billion dollar marketplace.

If we can get high single-digit share, we've got a 300 million dollar-earning business, bottom line, there. And so we're excited about that.

[Jonathan] (18:25 - 18:46)
Do you one day envision the international iGaming to be bigger than the US iGaming?

In totality, yes, it could and should be. Yeah.

I know this may be many years in the future, but this is such a high-margin business. Could the iGaming one day surpass in importance the actual physical gaming aspect of the business?

[Bill] (18:47 - 19:24)
I guess at some point, but there's a long way to go for that. We've taken this business, the BetMGM core business domestically—we were underwater 200 million last year.

We're going to push 200 million dollars in profit this year. So we've done over a 400 million dollar swing in the course of the year. And so it's hit its critical point, and we're going to continue to grow from here.

That's a long way away though from the combination because, don't forget, we have a Macau business that throws off a billion-plus a year in cash as well, in EBITDA, not in cash—in EBITDA. So there's some room to grow there.

But we have said and we believe our BetMGM business is going to hit the half-a-billion-dollar mark over the next couple of years.

[Jonathan] (19:24 - 19:35)
You had just mentioned the Macau business, and it's obviously a great business, but it's also in a place where there's a lot of regulatory uncertainty. How do you manage that? And how do you think investors should think about that?

[Bill] (19:36 - 20:57)
I don't know if I would use the word “uncertainty” actually. With this new relationship, we have seven years to go and then they have a three-year extension if the government chooses to take it. In terms of regulations themselves and policy, there's a lot of clarity. In terms of how to invest, in order for all of us to get licensed, we all had to contribute to the notion that we would spend, in our case, a billion-one on capital and a billion-one-ish on opex for non-gaming activity that we drive towards them and leisure activity into the market.

We're about a third into that spend and we're about a third into our license tenure. It's a little tougher from here—how to spend all that money and make it productive for not only us, but frankly in the community. They're trying to make it obviously more like Las Vegas.

The people will gamble while they're here, but that's not the primary reason they come. They come for all these other activities. That's the notional proposition.

We've got a long way to go—all of us there as operators—but that's the part that's a little less clear: how to get there. Everything else there is pretty straightforward.

As a regulator, as a marketplace, frankly, we feel good about where the Chinese government has landed in terms of Macau's existence and its going-forward [status]. Good signal, good signs on that, which are obviously very important in the long run. How to get this money spent and make it productive is really the challenge.

I think over the next couple of years.

[Jonathan] (20:58 - 21:13)
Just moving on to something that's very topical. There’s been the NBA scandal, game manipulation, prop bets, scandals. How should the industry think about where to draw the line on these betting types?

[Bill] (21:14 - 21:39)
The majority of all of that information came from us, the operators, because we are so dialed in, because we understand the odds, because we can see betting activity. We can hunt out quickly fraud, suspicious activity, etc. We all often now have become the policemen of the activity and therefore notifying the league of, “Hey, you might want to look at something here.”

That's the first comment I would make.

[Jonathan] (21:39 - 21:46)
Can you take us through that? How do you figure out that there's suspicious activity? What do you do?

What's the call?

[Bill] (21:46 - 22:21)
It depends on the activity. There are anomalies in activity. In our BetMGM place, we have 50 data analysts who look at betting data all the time every day—basically the oddsmakers themselves.

And when something doesn't line up the way we thought it would predict, sometimes we dig into it because, well, what happened here? Why weren’t we right about this? And through that activity—which goes on every day, all day—we find things from time to time that you go, “This is suspect.”

And we report them because it's not in our interest to have it happen because, by the way, we're the ones who are being taken advantage of.

[Jonathan] (22:21 - 22:22)
You're taking risk.

[Bill] (22:22 - 23:17)
Yeah, at the end of the day, we're the ones with the risk. And so we're very good at that. And so we'll call it out, finally, but we'll call the league or we'll call somebody and say, “Hey, by the way, you might want to take a look at this.”

And then they go off and do what they do. And so to that extent, it's been an advantage. I think where we all need to be cautious and we all need to have a righteous eye is play-by-play.

I'm betting on the next activity—case in point—whether it's a pitch, a strike, ball, in tennis, whatever the next play is, that's suspect and more so than the broader outcome of the game potentially. And so we just have to be diligent about it. I will tell you this: there's been enough black-market activity over decades that I'm sure all of that existed and continues to exist that I think we've become an interesting policeman in some of that because it's in our interest to make sure it doesn't happen.

And so the other side of that coin is obviously some of it gets called out publicly because it has to.

[Jonathan] (23:17 - 23:26)
Would you support the industry stepping back from some of the more exotic prop bets, or is it more of a case-by-case basis? What do you do going forward?

[Bill] (23:26 - 23:52)
I think it's a case-by-case basis. I think the engagement those prop bets bring is compelling. I think they're compelling for the sport.

I think they're compelling for fan engagement. I think they're compelling for media, for television time. When a football game’s 32 to 10 and there's four minutes left, who cares?

Well, if you care about the make of the next field goal, you care. And so you stay engaged and so on. I think there's a way to effectively monitor and effectively police it and continue with it.

[Jonathan] (23:52 - 24:03)
Just on the human side, when you see someone who's making $22, $23 million a year risk everything for a few hundred grand, does that just make you step back or how do you think about that?

[Bill] (24:04 - 24:19)
It makes you step back, but you have to recognize it's always existed and will probably continue to exist. And you've got to just be diligent about it. It is amazing to me, to your point, but like any criminal—I mean, go back to Ivan Boesky.

I mean, what was he thinking about?

[Jonathan] (24:19 - 24:42)
Yeah, Martha Stewart. Yeah, I mean, there's a better example on that level. One of your, I don't want to say competition, but perceived competition are the prediction markets, like Polymarket.

They have much lower fees because they match users instead of taking risk. Are they a competitive threat, or are they in a different category? How do you deal with that going forward?

[Bill] (24:43 - 25:55)
Well, we have been told very specifically by several states—Nevada among them—that it's off limits for us because we have followed it. We've followed the marketplace. We understand it's been in the UK for decades, by the way, it's not a new thing.

It takes a single-digit percentage of the market. So while a threat, not, I don't think, a massive one. I think the propositions generally—now they'll get better—have been weak. I'm not so sure they don't make some of their own markets when you say they're just pitting one against the other.

I'm a little dubious of that, but one day at a time. But they're getting closer and closer to having a product that looks and feels exactly like ours. No doubt about it. It's betting.

It doesn't have the regulatory controls. It doesn't have the age controls. So an 18-year-old in Utah can bet.

I'm sorry, Utah doesn't want it and a minor shouldn't be allowed to, but that’s underneath. But an 18-year-old shouldn't be allowed to bet, full stop. And so we're obviously very anti—not from a competitive perspective—but we just think it ought to be regulated by the states, as all of gaming is, and the notion that it could hide behind this federal regulatory environment called financial trades markets is just not appropriate.

And so we are opposed and we'll continue to fight it wherever we can.

[Jonathan] (25:55 - 26:09)
One of the big growth areas I referenced before is Japan. And you have a really exciting project there in development that's on your side. And I think it's a $10 billion spend.

Can you tell us a little bit about it, the opportunity, what you're going to be doing?

[Bill] (26:09 - 26:15)
We've been on this journey—you'll find this staggering, because sometimes it's how long these things take. We saw our first Diet member in 2009.

[Jonathan] (26:16 - 26:18)
Just to stop you, that's their equivalent to Congress.

[Bill] (26:19 - 28:38)
Exactly. So this was going to be a federally regulated deal, which it ultimately became. The Abe administration got enamored with opening up the country for tourism.

At the time in 2013, there were only 13 million visitors. If you think about Japan, it was staggeringly low compared to other really cool places to go in the world. Eventually legislation gets passed.

The build's extensive. Our project is $12 billion, not 10. But we picked Osaka because we thought they had the political will to want to get it done.

And we picked a partner called Orix because we thought they had the risk profile to want to get something like this done and the background and the backbone. And they did. And so we ended up, though, with the only license in all of Japan.

So if you think about it in the context of Singapore, which has two licenses, 6 million people, 20 million visitors—Singapore this year, Sands is going to make probably two and a half billion dollars of cash flow, bottom line. We have 120-odd million people.

We're the only licensee in [Japan] for any time for the foreseeable future. We've started construction. We'll be open in 2030.

We see it as our version of Marina Bay Sands and then some, given the market scale and size. It's an hour and a half closer to Beijing and Shanghai than Macau. So there's a, I think, over and forgetting geopolitical issues that may or may not emerge, there's a huge opportunity there with China visitation. China's visitation is up over 30 million now already. So that unto itself has been a positive.

It sits on a place called Yumeshima in Osaka, immediately adjacent to where the World Expo site was. Every day the last week there was a quarter of a million visitors that went to World Expo. So the infrastructure has been put in play to accommodate this kind of tourism and traffic in this zone.

It sits at the base of the Kansai region, which is where places like Kyoto and some of the amazing places are in Japan for visitation. It will be one of the world's largest, if not the largest, casino. We'll have over 6,500 slots.

We'll have over 750 table games. And so we're very excited by it—the upside potential and the fact that we're going to be the only one for a considerable period of time. And think about the profile of consumers and customers—the pachinko business in Japan itself has been a 30-odd-billion-dollar business.

And I would argue that the product offering that exists today in that space—we're just going to simply reestablish a whole new thing.

[Jonathan] (28:39 - 28:52)
So if you took something like the Bellagio—I could be off by a little bit—but 70% of the revenue is non-gaming or so. Is Japan going to be a similar type of situation, or is it going to be more of a gaming-centric place?

[Bill] (28:52 - 29:35)
I think it's going to be more gaming-centric than here because it's the only one. We're limited in room keys for today. We're going to have 2,800 keys.

There are two hotels we're building there. And so we're somewhat limited in that context, but over time that will change as well. So I think it'll be more gaming-centric just because of its scale than not.

But the goal is international tourism. The goal is to serve as a gateway for folks to enter Japan and go from there. It's going to be—a simple example—we're building a tourism center there.

It's about 45 to 50,000, not square feet. And it's to serve as a gateway to educate people on the rest of Japan and how to travel and where to go.

So the objective being, they come in, they go, they get into this tourism center. They learn about other places that they can go and visit.

[Jonathan] (29:36 - 29:45)
I mean, the opportunity sounds exciting, especially being the only one in the market. But you saw Sands and when they stepped back from pursuing the license. What did you see that they didn't?

[Bill] (29:46 - 30:53)
Well, one, we saw Osaka versus Yokohama or Tokyo, which ultimately never got there. Sands was pushing Osaka. We decided to have a Japanese partner at scale.

And so the way our partnership works is we're 48%, they're 40%, and we have a consortium of other Japanese partners who make up the difference. Think Panasonic, think high-end Japanese partners. We each have a small piece of this thing as part of a consortium.

So we said to ourselves, this is a Japanese enterprise. Sands wanted to do it principally for themselves—fair game. The winning combination now became: we were right about both location and that combination of partners.

And so we won the bid. It's the bottom line. Look, it's not easy. The tax is 30%. Building anything in Japan, particularly on an island—

We've got 3,500 pylons that go down 70 meters. This is not a simple feat by any stretch, but we're all in. I was there last week.

The site's literally coming out of the ground. You can begin to see the shape of the foundation, which is fascinating after literally 15, 16 years that this has compelled us forward.

[Jonathan] (30:54 - 31:08)
I mean, you talked about them—that they walked away. One of the things that you recently walked away from was New York. You were going to have a casino in Yonkers.

You decided to walk away from it. What was the thinking behind it?

[Bill] (31:08 - 33:43)
So in 2018, we purchased the Empire Casino. Yonkers Raceway is where it is and what it is—it's a 97-acre parcel right up the freeway, has a casino. So it's all slots.

We operate on behalf of the state. And so as you know, the proposition was and is ultimately adding table games and making it a full-fledged casino. So we own the machines.

We pay a tax. The first proposition for us was the taxes were high because we had to match and guarantee that particularly the education fund would not go down, which is where the vast majority of our current tax structure goes. It's 300-odd million dollars.

We also needed to keep the horsemen alive and keep the track going. That's a 60-odd-million-dollar proposition. And under the new regime, we had to give money to—which was fine—the city of Yonkers.

So the underwrite bill on this thing was, to begin with, 400 million dollars. Yonkers, while compelling in many respects, because we saw it as a large-scale regional casino—we didn't necessarily see it as a destination resort—got it. We saw it as large-scale.

But the closer the competition got to us, I mean, I was rooting for folks out in Nassau County. Anything downtown Manhattan was fine. But the way it ended up was you've got Bally's and, more notably, you've got the Citi Field proposition for 8 billion dollars, kind of in our backyard.

And so the competitive landscape was changing. Didn't love it, but okay. The final straw, though, was they changed the length of the license.

Within weeks—we had already made our submission of what we were to build—they changed the length of the license to: if you didn't spend 5 billion or more, you could only get a 15-year license. That was news to us.

And so it put us on edge about, well, what else will happen—between tax, any and all things. And so we decided to be prudent due to the capital. It was 2.2 billion today. So that means who knows where this would have ended up, but call it 2.2. We saw a massive concern around the taxes, the underwrite to begin with. We saw a competitive concern in that they were closer to us than we wanted them to be originally and we had hoped for. And then we saw a changing regulatory body that at the last minute said, well, I'm going to change the basis of how we're thinking about your license.

And we wanted to save the money for other things. And so we're still in business, to be clear. We still run this casino.

It's still productive for us. We're not going to have any competition for three or four years at the minimum. Aqueduct will do something, I'm sure, in the interim with tables.

But that being said, I think we're in pretty good stead.

[Jonathan] (33:44 - 33:46)
Is New York just a difficult place to do business?

[Bill] (33:47 - 34:01)
They weren't making this piece easy. I would say that. It was a long-ended process that needed to be clearer and more succinct.

And I'll just leave that at that. We're doing business there now. We've enjoyed our relationship with the city of Yonkers; they've been great, but it wasn't easy.

[Jonathan] (34:02 - 34:17)
Understood. We're big fans of IAC and Barry Diller. In 2020, they made a good bet on you.

They plowed a bunch of money into MGM stock. I think they own roughly 20% of the company. What did they see in MGM that the market didn't?

[Bill] (34:17 - 34:35)
Well, look, it was just coming out of COVID. So the value equation alone was spectacular for them, and they paced it right and timed it right. So there was just the very principle of: we were depressed.

I think the stock was trading at seven or eight dollars when I think they started considering this thing, which was obscenely low given, from the obvious, that these assets weren't going anywhere.

[Jonathan] (34:36 - 34:38)
And for reference, it's about 32 and change now.

[Bill] (34:38 - 35:23)
Exactly. So they made a couple bites at the apple. We've gotten back, since, almost 42% of the company.

So their share has grown up to 24% at this point of the game. They saw a burgeoning digital opportunity that they thought was very real, and they've been right about that so far. It's taken longer than we'd all like, but it is taking hold, and it is moving and it's productive.

And so they saw that opportunity. And then Barry, of note, has always had a vision and interest in Las Vegas. He's been a follower of Las Vegas for a considerable period of time.

He's extremely creative. He's a visionary guy in many respects. And so he likes the idea of, “How can I impress and impact my thinking on Las Vegas?”

And so for me, on our board, he's been a great visionary in terms of where we are and where ultimately we'd like to go. And so time will tell.

[Jonathan] (35:24 - 35:27)
What type of things has he suggested that you've run with?

[Bill] (35:28 - 36:13)
Mostly around the entertainment platform. I'm not going to tell you what they are yet. But [it’s] mostly around the entertainment platform of what to do. We've seen the Sphere here in Las Vegas just take off in terms of something that's productive in selling tickets.

It's been a great experience for the overall community. So it's incumbent upon us, as the entertainment leader in the community, to recreate some things here that we're working on aggressively in both our showrooms and outside of our showrooms that help add to the notion and the experience of entertainment and live entertainment, which continues to be on fire here in Las Vegas. And so programming is essential.

You know, not a week goes by now that we don't have something of real interest. This week happens to be Formula One. And it goes on and on and on.

Which is good. So [he’s] very active in all of that.

[Jonathan] (36:13 - 36:17)
In terms of helping you with digital, what type of stuff have they suggested or done?

[Bill] (36:17 - 36:57)
Particularly through Joey Levin, who has been their CEO for a considerable period of time. Joey's been active on the board with BetMGM. He's an observer who has been active in trying to help us think about database, how to do reach, how to do marketing, how to think about it, where to spend money.

And so they've been very active in that whole cycle. They've been active in the M&A that we got ourselves into this business on our own in Europe and in Brazil. And [they’ve been] very supportive of that activity.

I brought one of their guys into the company, a guy named Gary Fritz, who's now my Chief Commercial Officer, who also oversees those digital assets. And so getting ourselves established in that business has been under their stewardship. And so we're excited about that.

[Jonathan] (36:57 - 37:22)

Bill, this was fantastic. Thanks again for taking the time. We covered a ton of ground today—from MGM’s evolution and how you think about capital allocation, to the impact sports and big events are having on Las Vegas, to what’s happening in Japan and the digital side of the business.

I really appreciate you being so open and giving us a look at how you’re thinking about the next chapter for MGM.

Thanks for joining us—and thanks to everyone listening. We’ll see you next time on The World According to Boyar

To be sure you never miss another World According to Boyar episode, please follow us on Twitter at @BoyarValue. Until next time.