Changing ownership of casinos has been a significant part of the gaming landscape in Las Vegas from the very beginning, perhaps most notoriously with Bugsy Siegel at the Flamingo, the oldest resort on the Strip. Buyouts and mergers have shaped the Strip through generations.
But the immediacy and scale of two current potential transactions has captivated the industry. In late May, Caesars Entertainment entered into an agreement to be acquired by Fertitta Entertainment in a $17.6 billion deal. Texas businessman Tilman Fertitta, owner of Golden Nugget casinos in Las Vegas and elsewhere as well as the Landry’s restaurant group and the NBA’s Houston Rockets, will pay $5.7 billion for the Caesars empire, including eight casino resorts on the Strip and more across the country, and assume approximately $11.9 billion of the company’s debt.
A few days later, media company People Inc. offered to buy MGM Resorts—owners of a dozen Strip casino resorts—valuing it at $18 billion. People chairman Barry Diller sits on the MGM board and owns 26% of its outstanding stock, a stake valued at $2.9 billion.
“Watching both of them happen at the absolute same time, both places potentially selling within days of each other, is a bit of a surprise for people,” says Dr. Amanda Belarmino, associate professor at UNLV’s Harrah College of Hospitality. “But they are two very different buyouts. MGM is someone who exists on the board and by all accounts has been vocal for a while about taking it private.
“Caesars is a different ballgame,” she continues. “This is someone who knows the market but isn’t on the Strip, so there’s probably a lot more potential there to see some changes in day-to-day operations.”
Caesars merged with Eldorado Resorts in 2020, forming one of the biggest casino and entertainment companies in the U.S., operating more than 50 properties across the country. Fertitta’s acquisition of the iconic company—and its hefty debt, accumulated over decades—signals the mogul’s confidence in the future of the Las Vegas economy.
“Most people perceive it as a positive both for the consumer and employee point of view. [Fertitta] is a seasoned professional, a well-known businessman, his company has expertise in gaming and non-Las Vegas gaming, which is important because Caesars has so many regional properties,” Belarmino says. “He also owns the Houston Rockets and we’re about to see an NBA team come into the city, so that’s a positive because he knows how the NBA works and how it impacts demand, so he can bring that level of knowledge to the city as it incorporates that team into the landscape.”
She adds that Fertitta has a good reputation for taking care of employees and guests.
While a change in ownership can be a scary proposition for workers, neither of the Caesars or MGM transactions are expected to bring significant job losses in Southern Nevada. Past Strip mergers like Caesars with Harrah’s or MGM with Mandalay Bay create duplication that leads to job cuts. But since People is not a hospitality company, that duplication doesn’t exist with the possible sale of MGM Resorts, Belarmino says, adding “with Fertitta and Caesars, I think it’s unlikely, even though he has a Golden Nugget in the city. You need to keep your people in place.”
In a recent NPR State of Nevada interview, longtime Las Vegas gaming reporter David McKee said the seemingly risky buyouts could be very bad for the industry if tourism doesn’t improve. But recent positives in the market seem to bolster the apparent opinions of Fertitta and Diller.
“We began investing in MGM nearly six years ago because we believed it represented a rare kind of business: one with real world assets that AI cannot easily replicate,” Diller said in a statement accompanying his letter to MGM’s board. “We continue to believe the market materially undervalues the power and durability of MGM’s assets. We believe MGM’s management team is superb, and that there is a compelling opportunity to support MGM’s next phase of growth and help unlock its full value.”
PUBLIC VS. PRIVATE
In April, Golden Entertainment, parent company of the Strat hotel and casino and the widespread pub chain PT’s Taverns, went private, selling the Strat’s operations to chairman and CEO Blake Sartini, who founded the company in 2001, and real estate to Vici Properties.
Diller’s takeover offer for MGM would make the state’s largest employer a private company after it began trading publicly as MGM Grand Inc. in 1988.
“These things seem to come in waves, public and private. I think we’re in a private wave now, with more companies not wanting to be overexposed to the slings and arrows the stock market and all the other things that go on,” says Belarmino. “[Going private] allows for better long-term investment and not a valuation to be subject to short-term change.”
Operating privately ostensibly allows for a more tailored and flexible approach. With Diller saying MGM is undervalued and praising management, consumers shouldn’t expect wholesale changes to the company’s varied offerings. It’s more likely Fertitta would make changes to Caesars properties based on his company’s methods.
Belarmino points out that those changes, should they take place, would likely be considered positive by customers. “An ownership change often allows a refresh that it needs, that the current company can’t afford to do,” she says.
“[Las Vegas] has had a lot of really positive things going on. We’ve struggled since COVID and haven’t rebounded completely, and we struggle with international travel based on policies that are not ours,” Belarmino continues. “Those are things we’ve had to contend with, but when you look at [the buyout offers] it shows the outlook is positive. There’s a lot of bullish feeling about Las Vegas and that’s a good thing.”
Click HERE to subscribe for free to the Weekly Fix, the digital edition of Las Vegas Weekly! Stay up to date with the latest on Las Vegas concerts, shows, restaurants, bars and more, sent directly to your inbox!
