MGM Resorts (MGM) Partners MLS To Push Up Sports Betting

MGM Resorts International (NYSE:MGM) has entered into a multi-year strategic partnership with Major League Soccer (MLS). Notably, MGM Resorts becomes the Major League Soccer’s first official gaming partner. Furthermore, Roar Digital, which is the joint venture between MGM Resorts and GVC, becomes an official sports betting partner of MLS. Following the news, shares of the company increased 1.2% on Mar 19. In the past three months, the stock has surged 19.3% compared with the industry’s 25.1% rally.

The latest deal will not only provide MGM Resorts and Roar access to MLS data and sports betting customers but will also provide television-visible signage for more than 100 broadcast games countrywide. In an effort to connect with fans, MGM Resorts, MLS and Roar Digital together plans to develop “Free to Play” game. MGM Resorts and Roar will also promote the latter’s playMGM mobile sports betting app.

Sports Betting to Drive Growth

Last year, MGM Resorts entered into an agreement with new professional football league — The Alliance of American Football (“AAF”). Currently, it is the exclusive in-game gambling partner of the same. Notably, AAF has a mobile app that allows its user to watch gambling online and bet at the same time.

MGM Resorts had also announced a multi-year partnership with National Basketball Association, under which the former becomes the official partner of NBA and WNBA. Under the partnership, MGM Resorts uses official NBA and WNBA data and branding, on a non-exclusive basis, across its land-based and digital sports betting offerings throughout the United States.

In an effort to strengthen its foothold in the gaming industry, MGM Resorts seems to be banking on sports betting at various locations, following the legalization outside Nevada. In May 2018, the Supreme Court overturned the Professional and Amateur Sports Protection Act (“PASPA”) that banned sports betting outside Nevada. The court supported the legality of a 2014 New Jersey law, which allows sports betting at casinos as well as racetracks in the state. The decision also broke Nevada's monopoly on the betting market.

We believe that the scope for the casino operators has intensified following the legalization of sports betting outside Nevada as the illegal betting in the United States is valued at billions of dollars annually. Per MGM Resorts, legalization of sports betting will result in “hundreds of millions of dollars in profit to the company.”

Zacks Rank & Stocks to Consider

MGM Resorts has a Zacks Rank #3 (Hold). Better-ranked stocks in the same space include Melco Resorts & Entertainment Limited (NASDAQ:MLCO) , PlayAGS, Inc. (NYSE:AGS) and Zynga Inc. (NASDAQ:ZNGA) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Melco Resorts & Entertainment, PlayAGS and Zynga have an impressive long-term earnings growth rate of 18.7%, 12% and 22.5%, respectively.

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