Entain purchase could hurt MGM Resorts International’s Japan plans

American casino behemoth MGM Resorts International could reportedly seriously damage its chances of being able to enter the Japanese market by moving ahead with its attempt to purchase prominent iGaming and s 7BALL portsbook operator Entain.

According to a report from Inside Asian Gaming, this is the opinion of international brokerage Sanford C Bernstein Limited owing to the high price tag that would likely accompany any such acquisition. The London-headquartered financial services firm purportedly detailed that this expense would probably require MGM Resorts International to either exit or slim back on its effort to win the right to operate one of the three coming Japanese integrated casino resorts.

Triple try:

Sandford C Bernstein Limited analysts Tianjiao Yu, Vitaly Umansky and Kelsey Zhu reportedly declared that the successful acquisition of Entain would most likely ‘reduce MGM Resorts International’s appetite for a large-scale Japan development’ including the project the Las Vegas-based firm has been pursuing for the city of Osaka. For its part and the source explained that the casino giant recently failed with a second takeover offer for Entain valued at around $11.1 billion but has since returned with an improved $12.9 billion proposal.

Reportedly read a joint statement from Yu, Umansky and Zhu…

“The Japan opportunity has been plagued with delays largely due to coronavirus and we maintain concerns around the high cost of development required and the potential returns. MGM Resorts International may wind up backing away from a Japan integrated casino resort or reducing its partnership stake, which has not been announced in any event.”

Envisioned evolution:

MGM Resorts International already partners with London-listed Entain via the Roar Digital enterprise, which operates the BetMGM online sportsbetting service in multiple jurisdictions across the United States. Sandford C Bernstein Limited reportedly proclaimed that the proposed acquisition would likely allow the land-based casino operator to ‘reshape itself into a digital betting growth franchise with a strong bricks-and-mortar cash flow generating component.’

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Yu, Umansky and Zhu’s joint statement reportedly read…

“We do not expect MGM Resorts International’s interests in MGM China Limited to be impacted by any potential transaction with Entain as we do not believe MGM Resorts International would look to reduce its Macau exposure. Longer term, following concession renewals and depending on MGM Resorts International’s strategic focus, we can see Macau becoming less core for MGM Resorts International. With the Macau government’s blessing, an MGM Resorts International divestiture of MGM China Limited may be a path followed but this is not going to happen anytime soon most likely, if ever.”