The Internet and media conglomerate InterActiveCorp (IAC) announced that they have purchased a 12% stake worth more than $1 billion in MGM Resorts International.
IAC also received a seat on the board of MGM. IAC is an American holding company with interests in a series of media and online properties.
IAC has made no secret about their plans to expand their online gambling portfolio.
Analysts have noted that the MGM does not focus their market strategy on the online sphere, which raises the question of why IAC chose to invest in MGM, instead of other casino firms with stronger online gambling presences.
Barry Diller, IAC’s Chairman and Senior Executive, announced that their investment in MGM was made with the intention of renewing MGM’s interest in the online gaming sphere, as well as facilitating IAC’s own entry into the industry.
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Diller said that, while MGM currently has little in the way of online gambling in their portfolio, IAC believes that increasing MGM’s online gambling offerings will result in large revenue gains. IAC paid a total of $1.02 billion for 59 million shares of MGM, with more than half of their purchase having been made in the last two weeks.
Diller and IAC’s CEO Joey Levin wrote a letter to their shareholders explaining their MGM investment. Diller and Levin stated that MGM’s current online gaming revenue is low, but that the firm is well-positioned to capitalize on a legislative landscape that often requires online gaming firms to partner with land-based casinos to operate in legal markets.
Diller and Levin said that MGM could become a pivotal force in the direct marketing of online gambling in the same way they did for the land-based casino industry.
BetMGM Set For Tennessee Launch
MGM currently has its BetMGM online platform readying for launch in a number of states. One state that is being considered is Tennessee. While Tennessee does not require online gaming firms to partner with casino operators, IAC plans on using its board seat to push for MGM’s increased presence in the online casino and sportsbook industry, under its BetMGM brand.
Current estimates by IAC state that BetMGM will be operational in 11 states by the end of 2020. The BetMGM website says that the BetMGM mobile app will be available across Tennessee soon.
MGM investors have been happy about the IAC stake purchase so far. MGM shares rose 14% soon after the news was released.
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